- It’s becoming increasingly difficult for consumer product goods manufacturers and retailers to track and analyze product sales and consumption patterns by retail channel — largely because many data services don’t cover key channels, including e-commerce, reports Food Business News.
- “With the changing retail landscape, measuring consumption is not as simple as it used to be,” Kraft Heinz U.S. Chief Operating Officer Georges El-Zoghbi said during the company's recent earnings call, according to Food Business News. He pointed to Nielsen data that covers traditional retail outlets, mass merchants and club stores, but indicated the company presently has inadequate coverage of the high-growth e-commerce or hard discounter channels.
- Both Nielsen and IRI are building omnichannel capabilities to better track product sales across both offline and online channels, according to Food Business News.
Today’s consumers are channel agnostic and their path to purchase is becoming increasingly complex. The shopping routine now takes many twists and turns as consumers move from bricks to clicks, and from browsing to buying.
While convenient for shoppers, the growth of e-commerce makes it difficult for retailers and manufacturers to pinpoint where sales are actually coming from and how much of their physical store sales are being siphoned by online retailers — or other high-growth formats like hard discounters.
Brands have long relied on POS scanner data from research houses like Nielsen and IRI to track product movement by retail channel and specific retailers. With a growing share of grocery sales moving online, however, these types of third-party services are being challenged to maintain a holistic view — that is, one that includes e-commerce activities as well as retail store data — required by brands and retailers.
Regardless of the availability of data and analytics, food brands and grocers must prepare to do business differently because a growing portion of their sales are moving online. “Online sales make up less than 3% of total food and beverage sales, and the percentages vary by category,” IRI’s Senior Vice President of E-Commerce Sam Gagliardi told Food Business News. During its recent earnings call, Kraft Heinz commented that although e-commerce sales make up only about 1% of its total sales, it's growing at a 60% rate.
A study from Nielsen and the Food Marketing Institute finds that 30% of digital shoppers say they spend about a quarter of their food budget online today. The forecast calls for rapid change ahead in a relatively brief time period. By 2025, the firms project that 60% of digital shoppers will buy a quarter of their groceries online. Online grocery sales could exceed $100 billion by 2025, representing about a 20% share of the total $525 billion that will be spent on food.
Nielsen and IRI, as well as a host of other e-commerce research and analytics firms, are moving to build capabilities to measure the impact online activities are having on food and beverage products and where they’re being sold. Meanwhile, one way brands can adapt and monitor changing consumption patterns is by working directly with retailers to analyze their proprietary shopper databases.
Kroger, for example, is held up as the industry standard in mining its Plus Card loyalty data and applying advanced analytics to understand its shoppers and their purchase behaviors. It is not a stretch to say that brands should be collaborating with retailers to use their data to better identify and understand omnichannel trends — that is, whether their product sales are ringing through store registers or an online service like Kroger ClickList.
A big wild card in the omnichannel data discussion is Amazon. The online giant is a data-driven company that tracks its customers individually. It has a granular understanding of not just what they buy, but also what motivates their purchases and much more. With a growing share of grocery sales expected to move through Amazon, brands that can strike a collaborative relationship early on will be best positioned to access relevant brand and product-level online data that can help them with decision-making and strategic planning efforts.