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Grocery to move aggressively to digital by 2025

FMI offers insight into the the future of grocery retailing at Midwinter Executive Conference

When it comes to the ever-developing digital shopping universe, grocery retailers and their suppliers need far greater collaboration and must operate like an integrated company to compete effectively in the coming years.

That was the message from a panel discussion titled The Age of Connected Commerce: Digitally Engaged Shoppers at the Food Marketing Institute’s Midwinter Executive Conference in Scottsdale, Ariz. this week.

According to research from FMI and Nielsen, within the next decade, online food shopping will reach maturation in the U.S., far faster than other industries that have come online before.

The research showed that the centre store is likely to shift online faster than other departments and that consumer spending for online grocery shopping could reach $100-billion in the next eight years—the equivalent of 3,900 grocery stores, based on store sales. Other key findings from the report include:

  • — Shoppers are buying more of their groceries across channels. Almost one quarter of American households buy food online, and that number is expected to increase dramatically in the coming years. Of those shoppers who will buy online, 60% expect to spend more than 25% of their food dollars online in ten years.

  • — Supermarket retailers and their suppliers continue to test new digital business solutions and technologies to gain advantage online. There are are, however, few real success stories at this point.

  • — Younger, newer and more engaged digital shoppers adopt grocery related digital technologies more quickly and will hasten the expansion of digital grocery shopping further.

The panel discussing these findings included Mark Baum, senior vice-president and chief collaboration officer at FMI; Dave Bornmann, senior vice-president of business development at Publix Super Markets; Benno Dorer, chairman and CEO of the Clorox; Chris Morley, president of Nielsen U.S.; Tom Furphy, CEO of Replenium and Thom Blischok, chairman and CEO of The Dialogic Group.

The panel unanimously agreed that there is a need for retailers to use data to better understand shoppers and to make the process of getting product to those shoppers wherever they want it more efficient. This will require reinventing most of the traditional retail operations and enhancing activities such as merchandising and marketing, and automating many retail processes to ensure customers are engaged across digital and physical sales platforms.

FMI’s Baum said retailers need to seize the opportunity to harness new skills and collaborate more seamlessly than ever before to effectively reach these digitally-savvy food shoppers. "We’re building the tools to help our members assess where they are in their connected commerce strategies,” he said.

A report titled "The Grocery Reshaped by Digital" represents FMI and Nielsen’s initial insights from a multi-year initiative designed to provide a comprehensive look into the behaviors, motivations and expectations of the digitally engaged food shopper.

The report gives recommendations on how food marketers and manufacturers should be preparing their strategies and managing the organizational change that will be required to engage those shoppers.

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