That's quite a statement. What makes you think that?
Here's a killer stat for you: 76% of FMCG growth around the world now comes from outside of supermarkets and hypermarkets, according to those clever analysts at Kantar Worldpanel, who number crunch spending behaviour across all retail sectors. It's a pretty worrying statistic for anyone whose business model is focused on the size, stature and strength of the Big Four grocers in the UK who currently hold around 67% of all our grocery market, down from around 75% in 2008. For decades if you were a recognised FMCG brand then you knew you had made it. The big retailers needed you just as much as you needed them. You had mile after mile of supermarket shelves from where you could sell your products, all backed up with a world leading distribution system. Now that domination is hardly going to go away overnight, but it reinforces the need for brands and their suppliers to have a multi-channel strategy that covers different types of grocer, from big to small, discounter to convenience and a nod to the on-trade, restaurant and bar sectors too.
That's a lot of speculation from just one statistic.
It would be if that was a one off figure from a random survey. You only have to look at your own spending behaviour to see how fast global consumer trends might be changing. How often do you go and do a big weekly shop at the supermarket? For special occasions, events like Christmas and Easter, perhaps, but week in week out? Chances are you getting a lot of what you need delivered, or picked up during the week on the way home from work. You might be signed up to a couple of fresh food or vegetable delivery services, treat yourself to a weekly takeaway, and a family meal out. That does not leave a lot of room, or need, to pack your fridge and freezer out with trolleys full of FMCG brands bought from the biggest local supermarket.
So what's driving these changes?
Well, convenience for one, and we're not just talking about regular trips to the garage or local shop. Although that is part of the story. But all the other ways we can now get what we want thanks to 4G, higher internet penetration, constantly upgrading smart phones, price comparison and delivery apps, online banking and mobile wallets. We can now personalise our shopping trips, and get stuff when we want and need it.
So it's all down to growth in e-commerce then?
It's certainly very much part of the story. It's also where Kantar Worldpanel says the biggest slice of that 76% of FMCG growth is coming from. E-commerce sales globally grew 30% in the year to March 2017, were up 15% again last year, and now account for 5.8% of total FMCG sales. Kantar expects that share to rise to at least 10% by 2025, when it will be worth $170bn. Noticeably London is singled out as a 'megacity' for e-commerce, alongside Beijing and Shanghai, and already has a 10% share of the grocery market. For years e-commerce was held back by a lack of functional technology and a consumer reluctance to share financial data online. But we're now well past the tipping point and appear quite happy for our lives to be dominated by disruptive online platforms, like Uber, that allow us to get what we want - now. The challenge for brands, and retailers, is to better understand how we are all using e-commerce, but those with the most effective omni, on and offline, channel strategy are going to be the most successful.
What else do big brands need to be thinking about?
From a big player's point of view they have to address the fact we've all got a lot more fussy about where we spend our money, thanks to all the new options available to us, and what we spend it on. Which increasingly means not buying brands. Stéphane Roger, global shopper and retail director of Kantar Worldpanel sums it up nicely: “Shoppers are moving to less expensive options, like discounters, private labels or promotions”. Areas all switched-on wine brands, suppliers, producers and retailers should be concentrating their efforts on.
What's the answer then?
Be quick, flexible and have a simple brand offer that consumers can easily understand, access, engage with and shop for - both in-store, but most definitely online. Brands simply cannot afford to be big only in one retail channel. The big grocers simply do not have the control, power and influence they used to have. To be a true household brand in the future you need to be where those households are going to spend their money. Success as a brand has become less about how many actual products you sell, but where you sell them and if you have the networks, the connections, the functionality in place to allow you to grow next year.