Retail landscape changing with more e-commerce food sales
Aug. 21, 2017
by Jeff Gelski
Online sales may be cannibalizing brick-and-mortar sales in grocery categories.
PITTSBURGH — Online sales are taking away from sales at retail outlets, which may complicate matters when it comes to analyzing how certain categories are faring. Retail outlet sales alone may not reflect accurately whether overall sales are rising or falling within a certain food or beverage category.
|Georges-El-Zoghbi, COO of the US commercial business for Kraft Heinz
“With the changing retail landscape, measuring consumption is not as simple as it used to be,” said Georges El-Zoghbi, COO of the US commercial business for the Kraft Heinz Co.
During an Aug. 3 earnings call he was asked about Nielsen data showing sales volume down for snack nuts, shelf-stable juices, coffee and powdered beverages. He said the Nielsen data mentioned were covering traditional retail outlets and some mass merchandisers and club stores, but the data were not covering hard discounters, some big club players and almost the entire e-commerce channel. E-commerce sales at Pittsburgh-based Kraft Heinz, although they make up about 1 percent of total sales, are growing at a 60 percent rate, he said.
“The two largest segments we have in e-commerce happen to be the snack nuts and coffee segments,” El-Zoghbi said. “So they lent themselves more toward that channel.”
Online sales make up less than 3 percent of total food and beverage sales, and the percentages vary by category, said Sam Gagliardi, senior vice president of e-commerce for Information Resources Inc., a Chicago-based market research firm. More coffee, for example, is being bought online, not just by consumers but also by companies wanting to stock their offices, he said.
US retail ground coffee sales were $9,451,231,616 in the 52-week period ended July 9, down 0.3 percent from the previous 52-week period, according to IRI data covering supermarkets, drug stores, mass market retailers, military commissaries, and select club and dollar retail chains.
“We do not see in-store growth returning here in the foreseeable future,” Gagliardi said of overall consumer packaged goods. “In fact, we largely believe, especially when it comes to food, that most of the sales that are happening on-line are cannibalizing the in-store sales.”
More coffee is being online, not just by consumers but also by companies wanting to stock their offices.
New York-based Nielsen estimates e-commerce sales make up about 8 percent of total consumer packaged goods sales, said Jordan Rost, vice president of consumer insights.
“With foods and beverages, it’s a little bit lower than that,” he said.
On-line sales make up a bigger percentage of overall sales in the personal care, beauty care and pet care categories than they do in food and beverage categories, he said.
“I think where we have seen some of the early developments with food and beverages in particular are with center-store categories, generally the packaged foods,” Rost said. “We see particular development in the snacking categories — so nuts, crackers, snack bars.”
He added, “The brick-and-mortar trajectory is still trending downward, and e-commerce is growing so fast.”
While e-commerce sales increase, better ways to track those sales develop.
E-commerce development is growing in the snacking categories.
“There’s a growing landscape of tools that are available,” Rost said. “Nielsen is investing heavily in building some of our own capabilities around not just e-commerce measurement but really understanding the entire path to purchase as well.”
IRI offers three systems that measure e-commerce sales, Gagliardi said. A point-of-sale system includes all sales purchased on-line. A panel system involves IRI tracking the online purchases of more than 9 million shoppers. A third system combines the point-of-sale system and the panel system. I.R.I. in this system may create a custom database for clients that has on-line sales and in-store sales in the same platform.
“So they’re actually able to look across the omnichannel, both online and off-line, on a single platform with the same product definition,” Gagliardi said.