|Shawn O'Grady, senior vice president of global revenue management and group president of convenience stores and food service for General Mills|
“Last fiscal year, our e-commerce sales grew 60 percent in the US, which is 20 points faster than the growth in on-line food today,” said Shawn P. O'Grady, senior vice president of global revenue management and group president of convenience stores and food service. “And we have achieved this off a significant base. We continue to see strong double-digit growth ahead for our global e-commerce business largely led by the US.”
From a global perspective, O’Grady said e-commerce business models are in varying stages of development, with many European retailers offering a full basket model, Tesco adopting a home delivery model in the United Kingdom, and such on-line retailers in China as Alibaba and JD aggressively expanding their grocery footprints.
General Mills divides on-line shopping patterns into two broad categories: spearfishing and full baskets. Spearfishing involves the purchase of a few select items while full basket shopping may involve the replenishment of pantry staples. O’Grady said spearfishing currently dominates all e-commerce category shopping in the United States, including food.
“In full basket, consumers stock up on family favorites, such as Cheerios, Pillsbury refrigerated dough or Yoplait yogurt, and are shopping full categories similarly to how they would shop aisles in a grocery store. Big brands are advantaged because the assortment looks similar to what a shopper sees in the store and fewer bigger players capture more eyeballs on the first screen. We expect full basket to drive the majority of the growth moving forward.”
He added that traditional retailers are eager to enter e-commerce for three reasons. First, the best grocery shoppers, large families with children, are moving on-line to shop. Adding to the pressure on retailers is consumers are shifting on-line for stock-up trips, which tend to have much higher basket rings.
For food manufacturers, O’Grady said there is a huge opportunity to win shoppers' first basket.
“On-line sales are more sticky because each time a shopper goes back to the same site to buy more groceries, they start by looking at past purchases,” he said. “Imagine walking into a grocery store and seeing everything you bought in the past several months already in your cart. That's not too far off from what happens when someone shops full basket on-line. This stickiness and high chance for repeat purchases is why we're so focused on winning the first basket.”
Noting that the shopping experience at the “digital shelf” is different from the traditional grocery aisle, O’Grady offered some examples of how General Mills is approaching e-commerce and digital merchandising.
“Our market share on-line is 20 percent higher than it is in a physical store,” O’Grady said. “This means that as more shoppers transition on-line, we're in an advantaged position. We're also aggressively partnering with retailers to imagine how groceries will be sold on-line in the future.
“One leading trend is experimenting with how consumers will shop by voice using devices such as Amazon's Alexa. We partnered with Amazon to leverage our Betty Crocker cooking knowledge for new Alexa skill called ASK Betty.
“Because this space is evolving so rapidly, we’ve learned our share of lessons quickly. We’re working rapidly to develop full basket capabilities. We’re building real-time analytics using algorithms and machine learning so that we can move quickly and improve the consumer experience. Importantly, we’re working closely with our supply chain teams to increase our agility and respond to the fulfillment demands of on-line grocery. And we know that it’ll be critically important to balance central global capabilities with local tools deployed to regional teams in order to drive overall success across all of our geographies.”