Nielsen says online food sales unlikely to surpass “bricks and mortar” food shopping
- November 1, 2012
- Kate Carey
According to a recent report by consumer research company Nielsen, the US digital shopping industry is estimated to continue to grow at 25 percent through 2015. The report says that multi-channel platforms are of importance, but e-commerce is unlikely to take over “bricks and mortar” shopping in the United States food sector.
The report said that digital shopping only accounted for two per cent of US consumer packaged goods (CPG) sales in 2011. The report also said that product category is a large factor in whether digital purchases or “bricks and mortar” channels are better.
Nielsen said that many relatively expensive non-food products attained high digital sales well above the consumer packaged goods average. However, the report detailed that food categories such as carbonated beverages, dairy, liquor, beer, produce and frozen food have a very small proportion of sales online. These categories encounter physical barriers to e-commerce due to factors like refrigeration, perishable concerns and weight, and these are cost-prohibitive for shipping.
The following table was produced by Nielsen for its US digital shopping report:
Nikhil Sharma, Vice President, Consumer & Shopper Analytics at Nielsen US said that in an industry with modest growth like packaged goods, e-commerce will likely grow at the expense of more traditional channels.
“For CPG products, online shopping will not completely replace trips to stores anytime soon. However, digital will continue to play an increasingly important role,” Mr Sharma said.
According to Nielsen, digital shopping success is based around the consumer needs in the purchase process. The report details two enablers and two barriers in the digital shopping process that translate into “consumer’s fundamental needs when they shop: convenience, choice and value for their money.”
Nielsen considered the “urgency” barrier for digital shopping, based on the need for convenience. The need for “urgency” and “immediate consumption” can not always be met by digital shopping. Similarly, Nielsen also discussed the “inspection” barrier which prevents consumers from checking quality in store and their need for choice.
The Nielsen research said that convenience is “the ability to deliver a shopping solution that requires less time and effort. Price-value is the level of quality delivered at a certain price point.”
The Nielsen report argued that some product categories are better candidates for being sold online than others. Nielsen argued that manufacturers and retailers will benefit from examining both the marketing and the sales/e-commerce opportunity afforded by digital platforms.
The report used retail giant Walmart as an example of progressive retail marketing across multiple channels. It said that enhancing the benefits of physical store locations with those of the digital environment were beneficial. Walmart has integrated across e-commerce, mobile and in-store initiatives.
Online shopping in Australia, a different story?
The US research by Nielsen follows an earlier report in Australia by PricewaterhouseCoopers regarding the increasing growth in online shopping. Australian Food News reported in August 2012 that the PricewaterhouseCoopers report predicted a retail model that is continuously evolving to meet the on-going technological and consumer demands.
The PricewaterhouseCoopers report says online shopping expenditure in Australia is projected to reach $16 billion in 2012. This represents an increase of 17.6% from 2011 when Australian consumers spent $13.6 billion online. The report predicts that by 2016, $26.9 billion will be spent online.
In 2012, according to the PricewaterhouseCoopers report, 9.6 million Australians aged over 15 will make online shopping purchases.