By 2015, Nielsen predicts mass supercentres and e-commerce to be the big winners by dollar share gains, growing by a combined 5 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 to 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, senior vice president, Consumer & Shopper Insights, The Nielsen Company. "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 supercentre expansion may be slowing down from recent years, past performance would suggest there is 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.
"Today's big players will only grow bigger," said Hale. "Industry change will grow faster and more intense in the next five years, requiring advanced, future-focused change management skills among CPG professionals."
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 ownership nearly doubled between 2008 and 2009 and increased their share of the mobile phone market from 47 to 59%.
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.
"Without question, the smart phone has revolutionized how consumers leverage technology to simplify their lives and make better, informed shopping decisions," said Hale. "At the same time, CPG manufacturers and retailers have developed online and social marketing and brand/banner-specific apps to increase consumer loyalty, build sales and create a competitive advantage. This trend will undoubtedly continue and bring about game-changing innovations to our retail world."
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.
"When technology enables consumers to quickly locate the best price in their area, retailers will be forced to compete and differentiate themselves through factors other than price," said Hale. "We're at the beginning of a whole new world when it comes to consumer online and social marketing, and companies need to be developing and updating their digital and social media strategies now to remain competitive."
According to Nielsen, CPG retailers and manufacturers should focus on the following initiatives now to position their businesses for future success:
"Gone are the days when online marketing was led solely by the dotcoms of the world," said Hale. "Today, many CPG companies have embraced online and social marketing and are pushing the envelope further each day. In the midst of considerable consolidation and change, the future will be owned by those companies that harness technology to the make the consumer shopping experience easy, efficient and fun."
The Nielsen Company is a global information and media company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence, mobile measurement, trade shows and business publications. For more information, go to www.nielsen.com.
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