How can FMCG brands plan for success in the months and years ahead?
What did we see in FMCG?
As predicted, the pandemic drove very specific behaviours that temporarily shook the industry and sent profits skyrocketing. But, with lockdowns lifting, shops, bars and restaurants opening, we see that 2020 was an anomaly: in 2021 we are largely sliding back to pre-pandemic FMCG consumption.
2022 growth for FMCG is set to be around 1%, excluding inflation impact across the globe. Of course, as inflation rises, so will spend, we are likely to see around 2-3% revenue growth, if we include inflation. And this will drive a change in behaviour of its own.
Alongside this ‘artificial’ boost to the sector due to inflation, we will see more downtrading, with shoppers seeking to cut down their higher-than-normal basket spend.
Consumers will look to own-brand labels and cheaper options, reducing impulse buying and practicing more disciplined spending overall. This will be particularly apparent across more vulnerable markets, and lower-income shoppers.
With the extra squeeze on consumers’ purses, the most relevant sectors in shoppers’ baskets will be Food and Beverages, as fast-growing sectors in 2021 – looking particularly to higher-growth categories, which will still be the go-to due to the widespread acceptance of flexible working.
Ecommerce: A growth trend
Our report has found that ecommerce is unquestionably on the rise, with an annual pace of around 15-20% growth globally. Of course, this was nothing like the growth figures forced by the pandemic, but it is a clear indication of the strength of ecommerce activities more widely, – and its upward trajectory.
In terms of finding opportunities, looking to emerging markets is likely to be beneficial, and brands should look to build out a proper retail offer across online and social channels.
As the ecommerce channel matures, we are also seeing greater sub-channel segmentation, with quick commerce, aggregators, social media, and live streaming all serving as options that compete for market share and attention. Tracking how this matures and develops further will be beneficial.
Implications for FMCG brands
With rising costs, shoppers are purchasing fewer categories and limiting their basket size. So, brands need to be chosen much more often than before, making brand visibility more important than ever – especially as there is a trend towards fewer shopping occasions post-pandemic.
Tactics to increase visibility will range from activating promotions, having an extensive range that optimises the visibility of brands across categories, and ensuring (in brick-and-mortar stores) that products maximise shopper attention by winning the battle for eye-level placement on shelves.
In terms of focus, while we have highlighted the importance of ecommerce and shoppers’ likelihood to veer towards Discounters, the continued dominance of Hyper & Supermarkets should also be considered. We project they will still be dominant in 2025.
Looking ahead, it will be vital that brands track how shoppers cope with inflation, reviewing marketing strategies accordingly. Brands will need to plan and prepare for the growth of ecommerce, to prepare for the retail landscape in 2025 and beyond.
Vitally, ‘new retail’ should not be an afterthought. Just as the department store with ‘all goods available in one roof’ threatened specialist businesses (many to extinction), the modern version of ‘total commerce’ may soon eclipse all other market shares. These companies that offer ‘all concepts available in all formats’ (i.e., Amazon or Alibaba) may reign supreme, causing us to rethink today’s more ‘traditional’, segregated forms of retail.
How we can help you
1. Full retail landscaping
2. Channel Forecast
3. Inflation Coping Strategies
