Insights

Winning Omnichannel

20/06/2018

Shoppers visit more different types of channels with the rise of minimarts/CVSs & online shopping

Finding growth in reinvented retail

E-commerce, cash and carry and discounters gain market share globally
Hypermarkets and supermarkets still the most important FMCG channels

Our latest retail report “Winning Omnichannel: Finding growth in reinvented retail” is already out. This 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%).

We forecast 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%

Source: Kantar Worldpanel

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.”Source: Kantar Worldpanel

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%

Source: Kantar Worldpanel, Europanel

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[1]	Traditional and others[2]	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%

Source: Kantar Worldpanel, Europanel

David Anjoubault, General Manager of Kantar Worldpanel Vietnam, added: “In line with global context, achieving growth in the FMCG market is now harder than ever, even in developing markets like Vietnam. Though the economy in Vietnam is still among the fastest growing, FMCG growth is slowing down. By tapping into the consumer demand for convenience, minimarkets / convenience stores and online shopping are the fastest growing channels and are forecasted to further expand their shopper base in 2020 to reach nearly 2/3 and 1/3 of urban households respectively. Shoppers today have many more channels to consider when they are planning a shopping trip, and as a result, they are visiting more different types of channels than before. They move from traditional channels to modern channels, from brick-and-mortar stores to online platforms and vice versa. They always expect a better shopping experience with greater ease and speed. To meet their expectation, businesses need to consider omni-channel strategies and create new initiatives.”

*[1] Modern trade includes: hypermarket and supermarket, convenience stores and discounters

[2] Other include: door to door, drugstore, and pharmacy

*Follow links on the right side of this page to download the full report and press release.