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The pace of change is only accelerating as technology, marketing trends and retail formats converge to redefine how CPG retailers and manufacturers interact with consumers, according to The Nielsen Company’s Retail 2015 Forecast, revealed at its Consumer 360 Conference this week in Las Vegas.
By 2015, Nielsen predicts mass supercenters and e-commerce to be the big winners by dollar share gains, growing by a combined five share points between 2009 and 2015. Warehouse club, dollar store and pet stores will also grow share positions. Nielsen forecasts that supermarkets will continue to lose share, but at a declining rate. While both high-end and low-end niche grocers will grow share, overall share positions will remain fairly low, given lower per-store sales compared with larger formats. Other key CPG channels, including drug stores, mass merchandisers and convenience stores, will grow dollar sales but will suffer share losses.
“While e-commerce sales felt the recessionary pain in 2008 and 2009, Q4 2009 sales were solid and interest from both CPG manufacturers and retailers to provide online buying options has never been stronger,” said Todd Hale, SVP of consumer and shopper insights for Nielsen. “With tech-savvy Generation X and Millennials growing in importance in both numbers and spending power, the time is ripe for the next step in the evolution of online searching and buying.”
Hale also suggests that while supercenter expansion may be slowing down from recent years, past performance would suggest there’s still room for growth.
Nielsen expects to see further CPG retail consolidation as retailers look for scale and opportunities to expand their footprint into existing and new areas. Retail consolidation will be most active within the supermarket and convenience channels in the race for scale.
One of the biggest CPG shifts Nielsen sees by 2015 is already underway: the use of smart phones to engage consumers and help them make better shopping choices. According to Nielsen, smart phone penetration stands at 23 percent of all mobile subscribers and is expected to overtake feature phones in the United States by the end of 2011. Nielsen predicts that by 2015, smart phones will be the primary enabler of consumer shopping engagements and new technology innovations will generate additional opportunities for retailers and manufacturers.
Driving the rapid adoption of smart phones is the seemingly endless variety of apps, which take full advantage of the smart phone’s geographic location and interactive capabilities. Retailers are already using smart phones as a replacement for frequent shopper cards, sending store coupons and deals directly to a shopper’s phone. Nielsen expects CPG companies to further leverage the smart phone’s location-tracking abilities to target communications and promotions to shoppers both in and out of stores, and up-sell consumers on other items based on prior purchases. In addition, consumers will have the ability to locate the best available price for a given item, access real-time product reviews and promotions, and manage everything from household budgets and pantry inventory to tax preparation and filing.
According to Nielsen, CPG retailers and manufacturers should focus on the following initiatives now to position their businesses for future success:
—Develop or buy online/digital/social marketing expertise
—Plan for diminishing returns from traditional media
—Nurture retailer/supplier relationships
—Format planning. Consumers today are flexible — completely mobile — which means retailers need to get more flexible about how and where they sell products
—Demand forecasting by category and consumer segment
—Expand via regional or global opportunities
—Make future management a company strength
—Understand the new faces of opportunity
The Nielsen Company, based in Schaumburg, Ill., is a global information and measurement company. For more information, visit www.nielsen.com.