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Kantar Worldpanel study shows online grocery sales increased 30% globally

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Kantar Worldpanel study shows online grocery sales increased 30% globally

Online grocery spending soared 30% globally in the 12 months to March 2017, while the share of e-commerce sales rose to 4.6% in the fast-moving consumer goods sector, led by the U.S. and Chinese markets, a Kantar Worldpanel study has found.

Stéphane Roger, Kantar Worldpanel's global shopper and retail director, said sales of fast-moving consumer goods have been experiencing slow growth, with only a 1.3% increase in the 12 months ended Feb. 28.

According to the report, China and the U.S. are the main contributors to the online grocery sector's value growth, followed by South Korea, the United Kingdom, Japan and France. There has been significant value growth as well in Thailand, with an increase of 104% in market share of online sales; Malaysia, which saw an increase of 88%; and Vietnam, which posted a 69% increase in market share.

Europe had a 5.6% value share in 2016 but remains divided, the study said. While countries such as the U.K., with a 7.5% market share, and France, with a 5.6% market share, lead in e-commerce, other countries lag behind. Germany has only a 1.7% market share, with the Netherlands at 2.6%. The report adds that e-commerce is slowing down on the continent.

In the U.S., online grocery shopping has reached 30% of the country's total population. Kantar Worldpanel predicts that annual online spending for food and alcohol in the U.S. will reach $20 billion in 2017.

Online sales were the lowest in Latin America at 0.2% of the market, owing to consumer skepticism of electronic payment methods and customer preference for brick-and-mortar discount stores, according to Kantar.

Online cannot do it alone

The report said that with e-commerce companies investing in brick-and-mortar stores, plus traditional retailers collaborating with online businesses to expand their services, the future of the retail industry does not solely rest on e-commerce.

In a comparison between Alibaba Group Holding Ltd. and Amazon.com Inc., the report noted that the common trend between the two giant online retailers is the integration of both online and offline formats. Alibaba has partnered with Chinese department stores, Bailian Group and Intime Retail, and also with supermarkets such as Sanjian Shopping Club. Meanwhile, Amazon acquired Whole Foods in August, expanding into the fresh foods sector.

In the U.S., options that allow customers to order groceries online and pick them up at a store will drive growth over the next several years, the Kantar analysts wrote. Although only about 10% of U.S. stores have click-and-collect operations today, that percentage is likely to increase, the analysts wrote, with major grocers such as Wal-Mart Stores Inc. and Kroger Co. using their networks of physical stores to expand the distribution method.

"There is growing evidence that online formats — in isolation — are no longer the best option for winning share. It's about how online and offline work together to create a better shopper experience," Roger said.

Kantar Worldpanel forecasts that the online fast-moving consumer goods sector will be a $170 billion business and will hold a 10% market share by 2025.

Asia is expected to lead the e-commerce industry, particularly South Korea and China. Meanwhile, the U.S. is expected to increase e-commerce share to 8% from 1.5% in 2025. The U.K. is expected to increase from 7.5% e-commerce share to 12% by 2025; France, from 5.5% to 11%; and Argentina, from 1% to 5%.