The Forces of Change in FMCG Retail

Three major channel disruptions will transform the U.S. food and beverage landscape over the next five years: the growth of online grocery led by Amazon, the expansion of deep discounters like Aldi and Lidl, and the new popularity of alternate food and beverage options, including quick-service restaurants and meal kits. Nielsen’s global retail practice leader, Louise Keely, explored the relative size and impact of these disruptions during a recent panel discussion at the Grocery Manufacturers Association’s Leadership Forum.

For fast-moving consumer goods (FMCG) retailers, the competitive landscape is expanding dramatically. Their rivals are no longer just the grocer across the street or even the club store around the corner. Today’s merchants must find ways to regain their share of the consumer’s “stomach” as grocery dollars are reallocated across meal kits, convenience stores, restaurants and more. With most people in a perpetual time crunch, the clearest opportunity to win is making shopping and consuming both easier and more enjoyable. We see this coming to life in multiple ways, from curbside pickup to experiential stores and on-demand delivery.

Channel shifting will impact FMCG manufacturers like climate affects plants and animals. The new environment will require that they adapt—by adopting new strategies and priorities—in order to survive. And those who evolve are likely to find even greater success than before. For example, smaller FMCG brands with differentiated products will have the opportunity to build awareness and distribution through widely accessible online channels. Sales of private-label products will also grow, via both the aforementioned discounters and other retailers who are competing with discounters. Finally, restaurant-like products and services that offer convenience and quality will be uniquely positioned to respond quickly to shifts in consumer demand.

Established manufacturers can take inspiration from the players who stand to gain. As they innovate, they can learn from trends in out-of-home dining and small brands to understand new patterns of consumer demand. As they market, they can leverage their deep emotional connections with consumers (which stand in contrast to those of lesser-known brands) and explore direct-to-consumer distribution. And as they sell, established brands should clearly position their relevance as part of a retailer’s portfolio, alongside smaller brands as well as private label.

With retail disruption only growing, FMCG players must continually identify and adapt to the changes around them. In an upcoming webinar, Redefining Retail: Global Industry Disruptors, Louise will expand on the data behind these shifts and others, explore how they’re playing out around the world, and share what companies can do to stay ahead.

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