Why It's Important to Focus on an Omnichannel Strategy

Online is growing, but most food purchases still happen in physical stores

The Lempert Report

Sam Gagliardi, senior vice-president of e-commerce, consumer and shopper marketing for IRI, a Chicago-based market research firm, emphasizes in an interview in Baking Business magazine that most decisions people make in today’s world begin online. IRI data shows that 77% of all purchasing decisions for consumer packaged goods started online. However, he continues, in food at least, most actual purchases still happen in physical stores.

“In this world, it’s less about what you own and more about where you build your brand presence,” Gagliardi said.

Creating a strategy that simultaneously supports brick-and-mortar retail and e-commerce is a way to win in today’s digital world.

The omnichannel is different in that the seller is an online and in-store retailer, such as Walmart or Target. Then there are pure online players, such as Amazon. Each channel is growing in different ways, he said, emphasizing that, “You really don’t have the luxury to choose. You have to do both and understand the benefits and the risks going forward.”

“The online space is driven by search algorithms and creating lists,” Gagliardi said. “When you win, you’re improving a search algorithm. When you get on a list, you’re driving your sales.”

In early 2017, New York-based NPD Group reported that just 6% of U.S. consumers shopped online for groceries. By June 2018, that number grew to 16%, or more than 52 million people. Those consumers were using either delivery or click-and-collect models. The growth of click-and-collect and speedy delivery options launched by Amazon and other major grocery chains expanded the appeal of online shopping to the broader population, according to NPD Group.

According to Nielsen data, key retail players such as Walmart, Kroger and Target have grown their online customer base by at least 90% more than Amazon over the past two years. But because of Amazon’s appeal as a pure-play option and its wide reach, it has 10 times more buyer reach than any of the other merchants. Nielsen also estimates that since 2017, the share of click-and-collect sales grew from 4% to 11% for all CPG e-commerce sales.



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