Online sales are increasing at a healthy 15 percent per year in the United States, compared to a 1.5 percent increase in overall retail sales. Multi-channel retailing has experienced the fastest growth of all. This type of retailing involves customers purchasing something online and then picking it up in the store, or having it delivered to them from their local retailer. Estimates for growth in multi-channel retailing range from an impressive 40 percent to an astounding 70 percent per year.
Multi-channel shopping is here, and it is growing.
Clearly, consumer marketing for CPG brands must acknowledge and address multi-channel shopping, and there are rewards in doing so. Customers order more when they buy online, and when they go to retailers to collect their online purchases, they are likely to make additional in-store purchases while they are there.
Online grocery penetration in the US has reached 30 percent of the population, with annual spending on CPG brands through this channel expected to reach $20 billion this year. Here is what consumer marketing professionals should know about multi-channel shopping.
The Digitally Engaged Food Shopper
Online food shopping is expected to reach maturation within the next decade, with “center store” items likeliest to shift to online purchasing faster than goods from other departments. Practically, this means that while the consumer marketing opportunity is greater than ever, the time window in which brands can influence purchases is shrinking. Therefore, connected commerce preparation will be essential so that brands can meet the needs of digital shoppers while applying their consumer marketing resources optimally.
Articulating the Challenge
Nobody says this will be easy. Serving more purchase channels seamlessly pressures the supply chain, at a time when consumer expectations of service, convenience, and speed are higher than ever. A retailer that has focused on trimming operations in the pursuit of maximum efficiency must now rethink everything, from physical setup to business management.
CPG brands will have to revisit their strategies for forecasting, inventory management, and order management. While supply chain issues may be the most imposing at the moment, success in consumer marketing for multi-channel shopping requires a comprehensive approach.
Essential Elements for Success
The supply chain is the bedrock of the successful omnichannel consumer marketing strategy.
A McKinsey study of multi-channel retail projects identified five key features that set apart successful multi-channel projects from their less successful counterparts. They must be cross-functional, and include attention to consumer marketing, customer service, physical retail store operations, supply chain finance, e-commerce IT, and strategic planning. Further, brands must have a go-to-market strategy defining which products and services to offer online, in stores, and to wholesale and retail customers.
Supply-chain optimization is essential as well, and the supply chain network must be customized for each segment of the service strategy. Traditional best-in-class solutions may not be enough for a multi-channel strategy. Speed, flexibility, and use of insights from emerging data sources will also be necessary for readying the supply chain for multi-channel retail. Finally, brands must make a deliberate plan for transitioning to a multi-channel retail operation, with milestones and checkpoints along the way to gauge progress.
In the current climate of technology adoption, consumer online spending for CPG brands is expected to reach levels of $100 billion or more, the equivalent of 3,900 supermarkets based on store volume! Brands with the supply chain and other infrastructure in place as a foundation for multi-channel consumer marketing can be expected to weather the transition more successfully and create multi-channel retailing as an integral and gainful part of their business plans.
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