The Fire Burning Within Retail

Journeys of miles start with single steps.  Large fires start with a single spark.

Those in search of game-shaping market transitions look for data that runs contrary to conventional wisdom.

Allow me to bring to your attention some numbers from Nielsen, gleaned from a year-long primary research study.

The topic: The state of FMCG retailing. And the impact of digital commerce in Fast-Moving Consumer Goods (FMCG).

FMCG e-commerce today drives about a point and a half to the sector’s top line – a number near $700M. Not a big number – yet.

But this number will grow.  And fast.  Over the past twelve months, the growth rate of FMCG revenues received online, far outpaced that of in-store purchases.  (A few years ago Kantar Retail predicted grocery e-commerce would grow to nearly $60 billion in revenue by 2021.)

But what is interesting is not the growth. It’s the consumer behavior within the growth.

The conventional wisdom for online shopping says that shipping costs are a leading determinant of order conversion. And – especially in online FMCG. If to-the-home shipping costs are roughly the same whether you’re buying one item or a week’s worth of products, it’s expected that most shoppers will fill the basket to the brim to lessen the extra tariff.

Not necessarily so.

Nielsen tracked FMCG online purchase behavior for a full year, with the study concluding this July.  What they found:

  • Online FMCG basket size declined almost 6% year over year.
  • Online FMCG “purchasing occasions” increased by roughly 8%.

More orders.  Smaller orders.


Two big reasons:

Modern Retail Defies Conventional Wisdom

  1. A consumer value proposition that is all about convenience and ease, a value proposition that quantifies the value of time and frustration.
  2. The strength of Amazon and all that Amazon makes available for convenience and ease. Prime. Invisible check-out. Alexa.The takeaway for FMCG retailers and brands:

This is your future:  More digital.   More orders.  Smaller baskets.   A trend that will accelerate – up to warp speed – as we enter the realm of Open Conversational Commerce. Get ready.

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Jon Stine

About Jon Stine

Global Director Retail Sales at Intel. Jon Stine leads Intel’s global sales and strategy for the retail, hospitality, and consumer goods industry sectors. His CV includes leadership of North American retail consulting practice for Cisco Systems, and a prior stint at Intel, where he founded the company’s sales and marketing focus on the retail industry. His perspective on technology’s value in the industry has been shaped by advisory and project engagements in the United States, across the European Union, and in India, Australia, and the People’s Republic of China, and from 15 years of executive sales and marketing experience in the U.S. apparel industry, working with the nation’s leading department and specialty stores. At Intel, his current areas of research and engagement include the future of the store in this new digital age; how and where retailers turn data into competitive advantage; the role of technology within the new cross-channel shopper journey, and, the critical business and IT capabilities that industry success will demand going forward.