E-commerce, cash and carry and discounters gain share

20/06/2018

Hypermarkets and supermarkets still the most important FMCG channels globally.

Kantar Worldpanel, the global expert in shoppers’ behaviour, today launches its latest retail report “Winning Omnichannel: Finding growth in reinvented retail”. The publication reveals that in 2017, 76% of fast-moving consumer goods (FMCG) value growth came from channels outside supermarkets and hypermarkets. The three fastest growing channels globally are e-commerce (+15%), discounters (+5.2%) and cash-and-carry (+4.4%). These channels outperform hypermarkets and supermarkets, which continue being by far the bigger channels, but growing globally at slower pace (+0.8%).

Kantar Worldpanel forecasts that by 2020, 15.3% of FMCG products will be sold by the three fastest growing channels – e-commerce, discounters and cash and carry. E-commerce will be the fastest raising channel in 2020 representing 7.2% of the global market share boosted by increased internet penetration from markets such as Africa and Asia.

Table 1: Global FMCG value share by channel

	2015	2016	2017	Forecast 2020
Hypermarket & Supermarket	50.8%	49.8%	49.2%	48.4%
Discounters	5.1%	5.2%	5.3%	6.0%
Convenience	5.4%	5.5%	5.5%	5.8%
E-commerce	4.8%	5.4%	5.8%	7.2%
Traditional trade	18.5%	18.6%	18.4%	18.4%
Cash-and-carry	1.3%	1.6%	1.8%	2.1%
Others	14.1%	13.9%	14%	12.1%

Stéphane Roger, Global Shopper and Retail Director, Kantar Worldpanel, said: “The global FMCG market is harder than even growing only a+1.9% in value last year while gross domestic product (GDP) experienced an almost +4% growth. 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. At Kantar Worldpanel we predict that spending in supermarkets and hypermarkets will decline to 48.4% in 2020. Successful strategies need better understanding of the new channel dynamics at play and the differences between countries.”

The FMCG global market evolution
The FMCG market globally grew 1.9% in 2017. Less mature markets such as Africa, Latin America and Asia are the ones growing at the fastest rate (+8.8%, 7.3% and 4.3% respectively). In contrast, the market grew at 2.2% in Western Europe (influenced by inflation in the UK in the Brexit context) and US, the biggest contributor to FMCG spend in the world, saw almost flat growth (+0.5%). Demand is declining for three key reasons: population growth is slowing, people are generally trading down on their FMCG spend either by buying less or choosing private label, and they are also shopping less frequently.

Table 2: FMCG annual value growth in 2017

	2017 growth
Global	+1.9%
Africa	+8.8%
Asia	+4.3%
Latin America	+7.3%
USA	+0.5%
Western Europe	+2.2%

Adapting the retail strategy to shoppers
Brands that adapt their retail strategy to the expected evolution of channels in each region will have more possibilities to succeed. E-commerce continues to grow fast in Asia, which already has a 7.3% market share. The discounters are strongest in Europe, particularly Eastern Europe, where they hold 27.4% of FMCG sales, and in parts of Latin America such as Colombia (21%) and Mexico (18.8%). In contrast, in markets like Brazil modern trade remains relatively underdeveloped and cash-and-carry is growing fast, now representing 10.6% of sales.

Table 3: FMCG value share by channel (2017)

	Modern trade[i]	Traditional and others[ii]	E-commerce
Global	61.8%	31.8%	5.8%
Africa	76%	24%	-
Asia	51.8%	40.9%	7.3%
Latin America	55%	44.9%	0.1%
USA	88.2%	9.9%	1.9%
Western Europe	85.6%	8.8%	5.6%