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The most important avenue for many CPG categories to gain future traction is the click-and-collect model – under which consumers order online or on their smartphone and pick up their groceries at a store or a dedicated pick-up point – with Kroger, Wal-Mart, Target and Whole Foods either piloting or building out this service.
The above finding is among the highlights of a new report from The Boston Consulting Group (BCG) and the Grocery Manufacturers Association (GMA), which finds that food industry trading partners must earn their online market positions with new approaches and skills tailored to digital sales.
The report, "Winner-Take-All Digital World for CPG," identifies four factors that are shaping the market for CPG companies, foremost being while multiple business models are emerging, only a few will be disproportionately influential. These include several models advanced by Amazon (such as home delivery and Prime) and click-and-collect, which has demonstrated success in Europe and is well suited to the lifestyle of busy and mobile U.S. consumers. Second, the game is increasingly played by new rules requiring very new skills. Third, early-adopter consumers are already settling into patterns of digital buying behavior. Fourth, and most important, success breeds exponential success: once brands establish leadership positions online, they are tough to dislodge.
The most likely sector-wide scenario is for e-commerce in the U.S. to average 5 percent of the CPG sales mix by 2018, or some $36 billion annually, which would represent about half of expected CPG sector growth overall. As a result, companies that lack effective digital capabilities risk stagnation, share loss, or, in some categories, shrinking sales. At 10 percent penetration it is an entirely new paradigm.