Retail Roadmap
Guiding brands through the retail revolution
The boundaries in retail are like lines drawn in the water: there one moment and gone the next. As much as brands and retailers might wish otherwise, people don’t march through their day with a crystal-clear plan for clicking and carting.
The lines between the grocery aisles and the digital world are smudged by the lives we lead, each tap on a smartphone resonating as deeply as footsteps across the store floor. Yet, amid this blur, there lurks a risk: the quiet, evolving desires and needs of the consumer might just be drowned out by the roar of retail channel integration. So, how do you derisk and grow in this environment? Our global omnichannel channel data analysis illuminates potential strategies for navigating the nuances of retail.
Growth gridlock?
Let’s set the scene. In 2023, shoppers expenditure on consumer goods increased by 8.6%, the second-fastest in the past twelve years, behind only the pandemic spike in 2020. This growth was mainly artificial, it wasn’t real value growth at all. It was primarily driven by persistent inflation, a dynamic that insists on pushing its way into consumer spending power in 2024. Prices in most categories remain high.
At the centre of the dynamic, households were compelled to re-evaluate their spending priorities, opting to either buy less, move to cheaper stores or alter their product mix by incorporating cheaper products or buying on promotion. Spending priorities continue to be on the move.
Inflation hasn’t stopped spending; it has changed how we prioritise it
These varied inflationary settings underline the uneven pressures faced by consumers as brands recalibrate against the resultant shifts in their purchasing patterns. At the centre of the dynamic, households were compelled to re-evaluate their spending priorities, opting for value products or trading away from others in order to treat themselves with premium offerings. Spending priorities continue to be on the move.
Polarising powerplays
Across FMCG, all sectors witnessed value growth of more than 8%, with beverages, and health and beauty products experiencing the highest growth rates. This growth was partly a function of inflation but also reflected the sectors’ ability to premiumise their offerings effectively — a nifty trick in tough times. How did they manage it?
Brands in these sectors successfully tapped into emerging consumer needs, such as wellness and indulgence, which have remained resilient in consumer spending priorities despite overall tighter budgets. This ability to align with consumer preferences and introduce value-added products allowed these sectors to sustain momentum and drive higher revenue growth.
They found ways to convince shoppers to buy from them and save elsewhere — cleverly redirected spending. Retailers were also quicker to support some premium offerings, which tend to provide them with better margins.
Shopping behaviours
Amidst the wave of rising prices and this polarised spending spread between value and premium, there was also a noticeable increase in shopping frequency and trip spend across regions, driven by consumers searching for the best prices across different channels.
In the United States, consumers bought groceries from an average of 20.7 different stores in the latest year — dividing their grocery shopping across more stores to save money. That’s an increase from 16.8 stores in the year prior to the pandemic, a growth of 23%. Shoppers are not only visiting more stores but traveling further to capitalise on discounts and value offers.
Being more present will always be central to winning.
Navigating the omnichannel
The omnipresence of omni-shopping continues to be embedded in shoppers’ lives. Brands that maintain a consistent online and offline presence to meet consumers at their point of need and accompany them throughout their shopping journey, ensuring visibility at every conceivable touchpoint, are winning. It can be a tough game, but being more present will always be central to winning.
Private labels and product plays
Private label products have increasingly become a staple in consumers’ shopping habits, particularly in Europe, where they have carved out significant market shares. In 2023, private label products grew globally at a rate of 11.2%, surpassing the growth of branded products, which stood at 7.9%. This growth was not isolated but rather part of a broader consumer shift towards products that balance quality and affordability.
The rise of discounters
Discount stores have emerged as one of the fastest-growing retail channels globally, particularly in Europe, where they have even more firmly entrenched themselves in the consumer shopping routine.
In 2023, discounters saw their market share increase by significant margins. Indeed, discounters proved to be a helpful coping mechanism for those chasing price relief at the height of inflation in Europe, where we saw meaningful increases in trips to discounters and spending led by food and dairy.
While the growth of discounters is most pronounced in Europe, there is a noticeable expansion in other markets, including the United States and Latin America. The adaptability of discount stores and their focus on cost-effective logistics and store operations makes them a formidable force in the retail sector. Their growth is a reflection of changing consumer preferences but also of the economic pressures that drive shopping habits. However, in the US, they still sit behind most other channels, including the club store behemoths. In Latin America, super and hypermarkets, along with traditional trade, still hold the biggest share of the market.
Ecommerce evolution
Ecommerce has continued to adapt and evolve. In 2023, ecommerce experienced a notable resurgence, after a much slower growth rate in 2022 – growth was particularly visible in the US. This growth was facilitated by the channel’s convenience and the continued emergence of new models, such as social commerce.
The significant drivers of ecommerce growth include increased shopping frequency and the broadening of consumer bases, which now cuts more clearly across generational lines, with both younger and older consumers appreciating the convenience of shopping from homes and phones. But there is clearly significant room to expand penetration in most markets.
Future trends
Platforms like Douyin and Kuaishou in Mainland China have reimagined ecommerce by integrating social elements. Looking forward, the continued integration of technology and personalised shopping experiences will keep ecommerce and social commerce at the forefront of retail growth in most markets.
Grocery.com will still be crucial to future ecommerce growth; in the US we’ve seen Walmart increase its trips per household by 55% in just one year. Driven by new site and app design, increased delivery time slots, integration of AI to enhance the ‘try before you buy’ experience along with a big market place push. Pure players, quick commerce and community buy groups will also continue to play a big role in ecommerce’s continued evolution.
Europe, often seen as a bellwether for global economic trends, has been grappling, like all regions, with a cost-of-living crisis that has forced many households into tight corners. As families struggle to balance their budgets, a shift in purchasing patterns has emerged, creating a landscape ripe for analysis.
The story begins with the rise of private labels. In a bid to stretch wallets, shoppers have increasingly turned to store brands — private label — which have seen their value share climb to a remarkable 42% across the continent in 2023. This trend underscores a broader movement (discussed elsewhere in this report) towards downtrading, where consumers opt for more affordable alternatives to their usual branded goods. The ramifications have been profound, with discounters, led by Aldi and Lidl, taking a larger piece of the market. Over just two years, the number of shopping occasions at these low-cost retailers has surged by 15%.
Beating the odds
This shift has inevitably impacted overall brand performance across Europe. The total brand Consumer Reach Points (CRP) dropped from 77 billion to 71 billion. Globally, brands have experienced a roughly equal chance of winning or losing CRP, but in Europe, the odds have been less favourable, with 56% of brands witnessing a decline. Despite these challenging conditions, a glimmer of hope persists: four out of ten brands grew primarily by expanding their customer base.
Among the top performers, a few brands have defied the odds. Kinder and Haribo, with CRP growths of 4% and 2%, respectively, have managed to outshine their competitors. But it’s not just the giants that are making waves. Many smaller and mid-sized brands, with their unique European footprints, have also shown remarkable resilience. Dairy brands like Mlekovita and Yoplait, energy drink producers such as Red Bull and Hell, and beloved Italian staples like Mutti and Divella, have all had stellar years. Notably, German laundry care brand Dr. Beckmann attracted 3 million new buyers, leading the charge in consumer acquisition.
The rise of discounters has also brought fertile ground for some brands. Coca-Cola, Kinder, and Dr. Oetker (the top 3 brands in Europe’s discounters) lead the pack, dominating customer choice and expanding their penetration in this competitive space. Mlekovita and Müller, both top 10 players in the discount segment, have also enjoyed significant gains, with Müller achieving an impressive 21.5% increase in CRP.
Looking ahead, as inflation eases, there are signs of relief for some shoppers that may open the product consideration set. Within that dynamic, the mission for brands remains clear: they must be present wherever the shopper is.
The coming months offer a critical window of opportunity. As market confidence slowly returns, brands must seize the moment to deliver on their promises of convenience and comfort being demanded of them.
Success isn’t just about awareness — it’s about being available at the point a shopper makes the crucial decision to choose a product. In other words, once the work of predisposing your target consumer has been done correctly, it’s about ensuring presence in the right spaces. Let’s explore five steps to successfully selling your brand.
A critical factor in sales success is your brand’s omnipresence across consumer touchpoints. Our research indicates that increasing distribution points is understandably the most potent lever for growing smaller brands. The question to ask is how many times your brand was present out of all the times the category was bought in whichever store or channel you’re targeting. Our findings show that only 10% of FMCG brands achieve over 80% category presence, highlighting the vast room for improvement and growth in distribution strategies. By enhancing presence, particularly in underserved channels, brands can dramatically increase their penetration and reach more buyers. For grocery brands, finding new presence is a constant, or you will go backwards. Why? Well, if we look back over the last decade in the UK, more than £3 billion annually has been taken from branded sales by private label products. And not independently from that, there has been a rolling rise of retailers that sell only a handful of brands — discounters.
Effective pricing strategies strike a balance between affordability and perceived value. Worldpanel’s data reveals that the biggest brands often hover around the median market price point. For example, within the FMCG sector, brands that align their pricing within ±5% of the most popular price point tend to capture a larger share of the market. This strategic pricing appeals to a broader consumer base and positions the brand as a value-for-money option, which is crucial in maintaining competitiveness. Marketers might often be tempted to aim for the more premium end of a category, and that can be a justified and successful strategy, but it must come with the awareness that it will limit the potential buyer pool.
The ability to anticipate and meet consumer needs before they become explicit demands is a significant advantage. Utilising insights from consumer panel data and understanding the occasions in which products are used, brands can tailor their offerings to match distinct and evolving behaviours. A diverse product range can meet a wider range of consumer needs and increase the brand’s market footprint. Brands with a broader range of SKUs are more visible and engage consumers more effectively. To be a bigger brand usually, but not always, means to have more SKUs. In three-quarters of cases, the number one brand in a category has more products in its range than the number two brand.
Consumption is not the only thing to consider for sales – obviously, it is also the mindset at the point of shopping. In the grocery world, the simplest example is to consider whether you are on the big weekly shop – or are you dashing in to pick up a few items. The shelf needs to be mapped to the shopping mission. For instance, our data shows significant differences in purchasing behaviour between quick top-up trips and extensive stock-up visits. Brands that adapt their product strategies to these nuances — such as offering bulk options for stock-up scenarios or convenient sizes for quick trips — enhance their relevance and appeal in specific shopping contexts.
The most important thing to remember about grocery promotions is that they have no long-term effect. While promotions will spike sales temporarily, the absence of a promotion sees a return to normal buying levels without residual benefits. This doesn’t mean promotions shouldn’t be part of your strategy, but they must be used wisely. Promotions can make a brand price competitive, increase volumes, and help maintain or grow shelf space. Tying promotions with advertising campaigns during periods of heightened consumer predisposition can also make the brand more available for purchase, thus leveraging short-term gains for long-term positioning.
It is a truth, that should be universally acknowleged,that promotions only have a short term volume impact
