As U.S. Retail Shifts Continue, E-commerce Thrives

As U.S. Retail Shifts Continue, E-commerce Thrives

Growth was tough to come by for the fast-moving consumer goods (FMCG) sector at the start of 2017, but topline dollar growth did increase in the second quarter. Overall, dollar sales for the year are up 1.4%, with online growth driving the majority of the uptick (0.1% growth in brick-and-mortar channels, compared to 21.1% growth online). Despite the meager in-store growth, the future looks promising, as Americans are feeling very positive about their general situations: Consumer confidence remains strong at an index of 118, well above the global average of 104.

Strong consumer sentiment is good news for manufacturers and retailers, as optimism is typically complemented by a willingness to spend. And the growth of e-commerce shows that consumers are spending their fair share—even if it is outside of brick-and-mortar retail stores.

There’s no denying the impact that e-commerce is having on overall FMCG sales. While e-commerce has driven 7% of all U.S. FMCG sales this year, it’s driven nearly all the growth, according to the Nielsen Total Store Report’s 52 weeks ended July 1, 2017. What’s more, consumers are growing more familiar and comfortable with online outlets, as consideration of trips to non-physical stores is up 50% from 2015, with sales growth from brick-and-mortar channels flat at 0.1%. With so much talk about the growth of online sales and market fragmentation, it’s important to understand the behavioral motivations for shopping—and not shopping—online. This is particularly relevant for grocery items, some of which are less likely to land in consumers’ online baskets.

For example, preferring to pick up in-person, immediacy and avoidance of fees are a few of the prominent barriers when it comes to shopping online. For many, however, the appeal of online convenience and price savings is fueling online growth—even in the grocery, frozen foods and dairy sections. Though dollar share is small (2.4% for grocery items, 0.9% for frozen foods and 1.2% for dairy), these center store edibles have seen impressive growth in online channels.

Looking across total U.S.FMCG, e-commerce is having a much larger impact on overall sales in non-food categories. Across total shopping trips, 14% of Americans say they consider buying online, which is up from 9% in 2015. Additionally, 33% more households are influenced by digital before they visit a physical store for non-food items than in 2015. Online sales growth across non-food categories isn’t homogenous, however, as pet care is clearly leading the pack.

Given the overall e-commerce trends in these categories, complemented by certain barriers to online food shopping, it’s not surprising that non-food categories are top of mind when it comes to buying online.

For more information on the growth of U.S. FMCG e-commerce, as well as trends on retail fragmentation, multicultural shoppers and health and wellness, download the Nielsen Total Consumer Report, Volume 2.