Before 2020, there were two constants in every edition of our annual Omnichannel report.
Before 2020, there were two constants in every edition of our annual Omnichannel report. Online was the fastest-growing channel globally and Super- and Hypermarkets – the biggest global channel – was the slowest, losing share and relevance. One of these has accelerated, and the other has reversed.
In 2020, ecommerce was again the fastest-growing channel, with 45.5% growth—more than doubling its growth rate from 2019. This has led to its biggest yearly increase in share ever across all markets. The channel gained +1.6% share and is now worth 6.5% of the total global FMCG market.
This growth represented 23% of total global FMCG growth—three and a half times higher than its share. Despite this level of growth, it was not the biggest contributor to FMCG growth in 2020. This honour was the Supermarket channel which contributed 38% of FMCG growth.
Supermarkets grew at 11.5%, ten times stronger than its 2019 performance. The channel gained back the 0.5% share it lost the year before to remain the biggest channel globally with 33.3% of share. However, this bounce-back was not seen everywhere. While the channel gained share in Asia and the US, it continued to lose share in Europe.
Despite growth increasing from +1.1% to +3.2%, Hypermarkets continued to fall behind the rest of the market. The channel lost another 1.2% share, mirroring the same loss it had in 2018. In Latin America, Hypermarkets managed to maintain share due to stores often being found within cities, whereas in other regions, they tend to be out-of-town and require further travel.
The Cash & Carry and Discount channels remained the second and third fastest-growing categories and continued to gain share–accelerating by +17.9% and +12.7% respectively. However, as already mentioned is this publication, the Discounters' growth has been far from consistent.
There has been a fall in Discounter share in Western Europe across GB, Germany, Spain, Sweden and the Netherlands. Almost all the share gains came from Eastern Europe (+2%). Alongside global discounters like Lidl doing well in the region, the local discounters are also gaining, such as Biedronka in Poland (which gained +1.6% share) and relative newcomer Fix Price from Russia, which recently raised $2 billion with its London IPO as it looks to expand even further.
Rise of regional supermarkets Spanish retail cannot be understood without its regional supermarkets. Across every region and city in Spain, there are local leaders in terms of sales and consumer sentiment. This means Spain is one of the most fragmented markets in the west, with Spanish consumers having a unique amount of choice.
These retailers had great success in 2020. By October, they had a 14.5% market share, gaining 0.7 points compared to 2019.
There is a common pattern among regional supermarkets which has led to their growth: they already had a strong proximity, but they have also proven they can be the place to purchase any type of FMCG, thus being able to grow in other sections.
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Ecommerce share is now over 3% in 15 markets worldwide, up from 8 in 2019. It’s even more remarkable that online saw the biggest gains in Mainland China (+6.4%), South Korea (+3.3%) and GB (+3.6%)—the markets where the channel is already most established.
The step-change in growth was due to penetration gains, which increased from 26.3% in 2018 to 29.4% in 2019 and 34.4% in 2020. An additional 5% of global households bought their grocery shopping online at least once online in 2020 – which is an additional 67m households.
The online penetration increase did not only take place in markets where saturation is low—it also occurred in advanced markets. Mainland China had the highest online penetration for FMCG anywhere globally at 87.5%, an increase of 9% penetration points. And there is still headroom for more shoppers, from advanced markets like the US, where penetration has just crossed the 50% threshold, to most Latin American markets, where it remains under 20%.
This step-change also represents a shift in who uses online for their groceries. It used to be predominantly a channel for time-strapped families who required big weekly shops, but it is now a channel for everyone. Prior to 2020 in GB, penetration was only above 30% for family households. It is now above 30% for all life stages, with retired households seeing the biggest increase from 19.4% penetration to 37.1%.
Experience is key to ecommerce In Mainland China, the ecommerce landscape has become more complicated and competitive. Top players such as Alibaba and JD.com are facing challenges from rising social commerce, which have forced them to explore innovative ways to enhance their shopping experience. For example, they have realised the importance of a simpler shopping process and are trying to optimise promotions in order to better satisfy consumers' shopping needs.
Propelled by COVID lockdowns, the new model of “live streaming and ecommerce” has experienced explosive growth in 2020 and helped many manufacturers to improve the conversion rate of their brands in an interactive way. Short video platforms, such as Douyin, are also growing their ecommerce footprint through shoppable livestreams within the app. Many brands are jumping in with their own shows as well as selling goods through influencers. In the long run, stronger commodity supply and after-sales service will enable live streaming ecommerce to develop in a more sustainable way.
O2O delivery services was another hot topic in 2020, with penetration of O2O reaching 60% across urban China. The penetration reached a peak of more than 40% in Q1 2020, and the retention rate of O2O is over 50%. Unlike community group buying, which mainly focuses on price, O2O exists to satisfy consumers' immediate needs. The target audience is less price sensitive but demands very fast delivery.
Globally over 66% of ecommerce shoppers rank shopping ease over saving money, with this number even higher in Mainland China. Fast delivery is a key factor in selecting specific platforms. For example, in the Household Cleaning category, JD.com is most often selected for fast delivery, although variety is rated higher on other sites.
In 2020, internet platforms such as Tmall, Ele.me and Meituan put more effort into developing O2O. Meanwhile, traditional retailers like RT-Mart, Yonghui and Wal-Mart have also accelerated their online business by building their own platforms or working with third-party delivery platforms. In 2021, O2O will continue growing and serve consumers more efficiently with the mutual support of ample supply from physical retailers and strong logistics offered by the delivery platforms.
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Despite the democratisation of online across demographics, there is still a strong skew towards ecommerce's popularity in big cities from Shanghai where online share is 32.1% (v 25% total market), to São Paulo where it is 1.1% (v 0.5%). We see this over-index in all cities, with the only exception being Paris where the share is 6% (v 8.3%). With a share of 13.1% and double the national average, Parisians still have a strong preference for local convenience stores.
WhatsApp democratising ecommerce Whilst ecommerce remains relatively small in Brazil, the growth there is still impressive, with 2 million more shoppers in the second half of the year compared to the first half, creating an additional 18 million new buying occasions. This doubling of penetration in Brazil is partly down to messaging apps such as WhatsApp, with almost 40% of online shoppers using WhatsApp to make an FMCG purchase.
The accessibility created by messaging apps democratises access to online shopping in Brazil in several ways. WhatsApp has enabled smaller, traditional trade retailers (which are more prominent in Latam than any other region) to have an online presence. It has given consumers a route to shop online, given smartphone ownership is higher than that of personal computers. It also provides households outside of metropolitan areas an ecommerce option, with ecommerce purchasing via WhatsApp higher in the countryside.
WhatsApp is not just accelerating ecommerce growth in Brazil. It is doing so across most of the Latam region where WhatsApp is the main communication app for many and remains free to use outside of contract.
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Key takeaways
Supermarkets and ecommerce accounted for over 60% of FMCG growth in 2020, with supermarkets reversing the recent decline and growing 10 times faster than 2019.
Ecommerce continued the trend of being the fastest growing channel in the world and gained an additional 67 million new shoppers in 2020 alone.
Getting the full picture on all these new ecommerce shoppers will be key to understanding what will happen over the next few years. Will they stay, or will they go?
