The channel shift to online grocery shopping continues at pace, with the UK one of the most mature grocery eCommerce markets in the world. In the first of a two-part blog series, we summarise guidance from Profitero’s VP Strategy & Insights Keith Anderson on how CPG brands can optimize their performance on the digital shelf, taken from Keith’s recent Category Management Conference presentation.
Online is the fastest-growing channel of retail distribution, but it’s also increasingly influential over offline sales. Despite accounting for just 4% of UK grocery sales currently, the online channel for grocery sales is predicted to reach 8.4% in four years according to IGD, driven by services such as click-and-collect. Indeed UK supermarket Sainsbury’s has just announced that 100 stores will offer click-and-collect by the end of 2015 with the first collection sites up and running by the end of March.
However the really compelling trend for CPG brands is the digital shelf’s increasing influence over offline sales, which is rapidly accelerating. According to Deloitte, 35% of food and grocery purchases were digitally influenced in 2014, a figure that’s set to increase to 50% of all store retail sales by the end of 2015.
So how should CPG brands evolve and optimize their digital performance?
Winning in the digital channel is about optimizing performance, continuous improvement, & partnerships – an audit at a given point in time simply isn’t enough. CPG brands need to continually understand, measure and optimize their product and assortment strategy, pricing and promotion, product content and search category ranking if they wish to succeed in this new digital age.
Online pricing is transparent & competitive
The way UK consumers buy groceries is rapidly changing as more and more shoppers prefer to do a bulk online order for key staples which is then supplemented with smaller top up shops in-store. As a result, the UK grocery market is one of the most competitive in the world, as price-savvy consumers use technology to shop around and find the best deal online.
Analysis conducted by Profitero on prices across the major UK supermarkets for exact-matched products, indexed against online-only grocer Ocado, provides critical insight into a brand’s pricing across the major supermarkets.
*Index to average price of Ocado products across exact product matches. Source: Profitero eCommerce data, Feb 18, 2014 – Feb 17, 2015, 2769 products. Retailers included Ocado.com, Groceries.asda.com, groceries.morrisons.com [Warwickshire], Sainsburys.co.uk, Tesco.com, Waitrose.com
Monitor product availability continuously and benchmark key competitors
Assortment analysis and a product’s out-of-stock status are also key drivers to ensure your products achieve standout on the digital shelf. As you can see in the example below, two supermarkets experienced out-of-stock issues from mid-January to the start of February.
Monitoring a product’s availability and benchmarking against your key competitors is essential to avoid seasonal stock availability issues, ensuring your product is available for shoppers to actually buy.