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Online CPG purchasing on the rise, as shoppers start looking for digital alternatives for groceries

By Paul Skeldon April 19, 2018 - 6:28 am

Good news for the likes of Amazon and other marketplaces wanting to corner the grocery market and other areas where they are traditionally not dominant – consumer packaged goods (CPG), once purchased almost exclusively in stores, are quickly moving into the digital realm as more and more consumers are researching and purchasing CPG products online.

This is according to survey findings from Periscope By McKinsey.  In all markets surveyed, the findings revealed that at least 70% of the respondents are undertaking some form of online CPG shopping activity, with French (40%) and UK (39%) consumers exhibiting the greatest balance of multichannel shopping preferences followed by German (33%) and US (32%) shoppers.

Periscope By McKinsey’s survey evaluated consumers’ current CPG purchasing behaviours as well as their future CPG shopping intentions.  It uncovered insights on which channels consumers use to make different categories of CPG purchases and the motivations behind their channel shopping preferences, the demographic impact on shopping channel choices, delivery preferences of consumers making CPG purchases online, and the effect of personalised recommendations on digital shopping.

Online shoppers prefer non-perishable categories in CPG

Research found that non-edible and durable food items are performing considerably better than perishable products like dairy and bread, revealing shopper hesitation about purchasing these types of products online.  Also, beauty and personal care products topped the shopping list for consumers in France (47%), the UK and Germany (46%), and the U.S. (38%). Similarly, cleaning supplies were included in the “Top 4” product categories consumers had shopped online within the past two months.

Age plays a role in CPG shopping channel preferences

Millennial shoppers (aged 18-29) were the largest group in each country surveyed, except the UK, to only or mostly undertake their shopping for CPG products online. However, their digital channel predilection is closely matched in many markets by those aged 30-39 and 40-49.  Interestingly, in the U.S., 22% of respondents who shop for CPG items only online were aged 50-59.  Similarly, the online purchasing behaviours of those aged 40-49 surpassed those in the 30-39 age group in Germany and France.  Meanwhile, in the UK, shoppers aged 30-39 were most likely to adopt a digital only position.

Discounts and bulk purchasing options drive online

When asked to evaluate how their online shopping habits differ from shopping in-store, consumers in all markets said they are more likely to buy more in bulk online and are willing to spend more if they can identify discounts and offers

Shoppers are also using digital channels to find the best deals.  Price and free delivery were selected by consumers in the U.S. (57%), Germany (57%), France (49%) and the UK (47%) as the top two factors influencing their online CPG purchasing decisions. Promotions and discounts were a close third for consumers in every country except Germany, where 30% of respondents said product descriptions were the next most important factor likely to influence the choices they make.

Recommendations are more welcome in some markets

Findings showed that at least 38% or more of consumers in every market surveyed say they are open to recommendations on a similar product but from a different brand.  Recommendations on products by the same brand was the second most welcomed prompt for shoppers in France (30%) and the U.S. (28%), while “frequently purchased together” style recommendations were particularly popular with 25% of UK shoppers.  Conversely, 36% of German shoppers made it clear they are unlikely to be swayed by recommendations, with over a quarter of shoppers in France (30%), the UK (29%) and the U.S. (28%) saying they don’t use or like recommendations.

Online shines bright for CPG in the future

A significant number of respondents noted that they plan to prioritise online channels when making CPG purchases.  In fact, over a quarter of U.S. (27%), French (26%) and UK (26%) consumers surveyed indicated they will predominantly be shopping online in the future, with one-fifth of German shoppers saying this will be their preferred channel.

However, CPG companies looking to boost online purchases across more products and category selections will need to emulate the engaging experience that consumers have when visiting a physical store. For example, meal recipes that show cooking ingredients on a virtual table could help draw the consumer along a shopping journey, while those exploring a haircare or beauty purchase could be given opportunities to upload their photo and virtually try out a new hair colour or makeup look.

“The survey shows that capturing the growing online consumer demand will require CPGs to build out their digital capabilities for strong omnichannel strategies. CPGs should focus on managing both digital stores and key account relations for digital, including assessing online channel performance, understanding how consumers shop a category online, and identifying innovation opportunities from online trends. It requires the same rigour that has been applied to physical stores for years. As respondents are motivated a lot by price and convenience when shopping online for CPG products, it is key for companies to have professional online Category Management capabilities in place to better leverage consumer insights to appropriately curate assortment, improve digital share of visual inventory, personalise conversations, and run promotions that maximize returns across channels.  At the end of the day, leading CPG organisations will evaluate their broader channel strategy and make the necessary investment in their omnichannel brand experience.”

– Brian Elliott, managing partner, Periscope By McKinsey

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