Channel digitalization and growth of the ‘phygital’ shopper
The future of online FMCG in Latam remains uncertain for now, and depends on how quickly technologies, channels and shoppers evolve. However, despite the easing of COVID-19 restrictions and increased mobility during 2021, FMCG Online penetration continued to grow in all countries, with Argentina recording the highest growth (39.2%). During Q4 2021, this started to slow down throughout Latam, having sustained consistent growth throughout the year.
Widespread digitalization is a stage-by-stage process that takes time to fully develop. New shoppers will jump in, while early adopters, who are first to embrace technology, will evolve their relationship with channels as they are provided with a more efficient experience. This will result in more frequent visits and higher ticket spending.
Without a doubt, channel digitalization will be essential for consolidating the basket size of ‘phygital’ shoppers – i.e. physical and digital. Even though Latin Americans have only recently started to embrace digital, they are on their way. The FMCG environment increasingly demands that manufacturers and brands are present in both the physical and virtual worlds. If not, they are less likely to survive in the future. Understanding the behaviour of digital (and physical) shoppers and capitalizing on these opportunities is the key to staying relevant.
Today, growing numbers of FMCG shoppers are connected to more channels through digital platforms, helping to promote omnichannel awareness throughout Latam and accelerating brand growth in certain channels.
In 2021, more households were shopping online for FMCG products in every country measured by Kantar, compared with the previous year. This was highest in Argentina (39%), followed by Chile (38%) and Bolivia (35%).
This is where we are seeing a new concept emerging that will set the tone for the years to come. O2O (offline to online) is growing as shoppers migrate to channels that offer a better online experience compared with in-store encounters.
The level of co-existence between digital platforms has increased by 18% vs. 2019, while shoppers were connected to more purchase channels throughout 2021.
Consequently, shopper spend in Latam is more fragmented. So, to encourage growth, both manufacturers and retail channels must work together to design and implement an effective omnichannel strategy that aligns with the modern-day shopper’s persona.
