Supermarkets are seeing their share of sales shrink due to the strong emergence of e-commerce in FMCG. In Europe, growth is slower: Asia is leading the way with innovative concepts. What will be the impact of the current crisis?
Supermarket under pressure
While the total FMCG market grew by 2.1 % in 2021, online grocery sales increased by 15.8 %. This growth is somewhat less spectacular than in the lockdown year 2020, when e-commerce for food grew by as much as 45.9 %, yet it still means that online has increased its market share: globally, 7.2 % of groceries are now done online, up from 6.3 % in 2020 and 4.8 % in 2019. In Europe, the online share is 6.9 %.
The logical consequence is that the market share of supermarkets and hypermarkets in the total food market is under pressure: it dropped from 52.4 % in 2020 to 51.4 % in 2021. Physical stores remain by far the dominant channel for food sales, but their share is declining year on year. The figures come from a new report by Kantar, entitled ‘Winning Omnichannel’.
New business models
The engine of growth for e-commerce is found – not unexpectedly – in Asia, where the online share for FMCG is already 15.3 %. 44.2 % of Asians shop online, on the Chinese mainland this is already the case for 88.8 % of households, in South Korea it is 87.1 %. New business models are popular, such as live streaming, group buying, online-to-offline…
Penetration in Europe is much lower at 35.2 % and seems to be stagnating. Older shoppers in particular, who were forced to go online in 2020, are now giving up again. Europeans are also slower to adopt new models such as quick commerce or social commerce. Fast delivery services, for example, are mainly used for ordering meals, not (yet) for grocery shopping. In France, the Drive retains an online share of 32 %.
Kantar does see that consumers everywhere are shopping online more frequently: the average number of online orders rose from 8.7 in 2020 to 10.4 in 2021. This growth will continue. Online will therefore continue to grow faster than other food channels in the coming years and will gain around 0.5 % share each year. This means that by the end of this year, the share of online shopping will be 7.7 %, and within four years it will be more than 9 %. Hypermarkets and supermarkets continue to lose share, but at a somewhat slower pace than in recent years. By the end of 2025, they will still have a share of just over 50 %.
The big question mark is how shoppers online and offline will react to the current crisis. Kantar expects a general slowdown: the total FMCG market would grow 1.3 % this year. The share of promotions will rise again. Growth in e-commerce will partly have to come from innovation. In that respect, the West can learn a lot from what is happening in Asia.