Retail’s omnichannel model is rapidly emerging

by Keith Nunes
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Keith Nunes

The news surrounding Amazon’s proposed acquisition of Whole Foods Market continues to generate significant speculation, some of it quite wild, about future consumer packaged goods purchasing patterns. Of course, it is the consumer who will be the ultimate arbiter of what business models succeed, and if there is one constant, it is that consumers prefer to have choices of where they shop. With that in mind, it is helpful to review how consumers are shopping today and may shop tomorrow to more accurately assess what changes may resonate in the future.

The term “omnichannel,” the concept of creating a multichannel approach to sales, has been referenced for many years, and as the retail marketplace has become fragmented, the concept has taken on greater significance. Manufacturers are now competing for share across rapidly evolving channels that extend from such premium formats as Whole Foods and Sprouts to hard discounters like Aldi, Lidl and dollar stores while encompassing club, drug, convenience and digital formats as well.

A new report from the market research company Information Resources, Inc. focuses on retail channel performance in 2016 and highlights some of the changes taking place in this sphere. Amid considerable change, supermarkets have not yet lost their primacy. Notably, the grocery channel accounted for 41 per cent of dollar sales and 51 per cent of unit sales in 2016, and outperformed competing retail channels for the year.

E-commerce
E-commerce currently accounts for approximately 8% of consumer packaged goods sales in the United States.
 

Quick trips account for more than half of all shopping trips, and the trend has remained unchanged during the past few years, according to I.R.I. The trend should not be surprising because retailers have been investing heavily in new store formats and models as they adapt to the changing marketplace.

A significant trend identified by I.R.I. involves programs retailers have developed to offer meal solutions and seeking to compete with food service and, more recently, with meal subscription services. One recent example includes the retailer Supervalu and its pending introduction of Quick’n Easy Meals, a service currently being tested before a full roll-out into the company’s stores.

Interestingly, I.R.I. says differing shopping patterns among generations may be significant. For example, millennials and those considered Gen X prefer to shop the mass market and supercenter channels. Younger baby boomers spend more time than the average consumer shopping in convenience stores, and seniors and retirees tend to shop more often in drug stores.

These different generational patterns underscore how greater personalization may drive consumers in the future. Retailers are using a variety of tools to attract and retain shoppers. As personal technology continues to evolve, one may expect personalization to become a greater force.

The I.R.I. report says e-commerce currently accounts for approximately 8 per cent of consumer packaged goods sales in the United States and that channel growth is “fast and furious.” The rapid growth of e-commerce is another component of the retail equation, but manufacturers must not lose sight of new opportunities in the brick-and-mortar formats. Those that succeed in the future will organize around serving the omnichannel and meeting the needs of consumers wherever they may shop.

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