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e-Commerce Industry News

August 29, 2014
CPG retailers need to be prepared for digital growth
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August 29, 2014
CPG companies are going digital. CPG companies are going digital.
The consumer packaged goods retail category, which often includes consumable items such as cleaning products, food items and apparel, has traditionally lived in brick-and-mortar stores. After all, if someone runs out of toilet paper, they are not likely to wait a few days for an online order to come in unless they are buying in bulk.

Times are a-changing for the CPG sector, however, as omnichannel retailing technology improves and same-day shipping becomes more prevalent. In-store pickup allows customers to quickly make purchases at their homes and then pick up bigger orders (for example, say the customer needed paper towels, toilet paper and a stick of deodorant) when they are out running other errands. Additionally, same-day delivery negates the wait time traditionally associated with online purchases

A new report from the Grocery Manufacturers Association and The Boston Consulting Group illustrated the potential digital growth the CPG retail sector may see over the next few years. The study suggested CPG sellers plan for a "1-5-10" market, which means while they currently have a 1 percent digital penetration rate, it could likely expand to 5 percent over the next five years and perhaps even as much as 10 percent.

Retailers selling CPG products that do not embrace omnichannel retailing strategies risk stagnation, as they may experience a loss of sales to merchants that do own online and mobile stores. In the retail sector, fortune favors the bold, and the first CPG retailers that move to digital channels have the most to gain in terms of establishing a digital audience.

"Like most other industries, the CPG industry is experiencing the signs of digital disruption," said Elise Fennig, vice president of industry affairs at GMA. "That's why it was vitally important for GMA to examine how CPG companies can holistically adapt their digital and eCommerce agendas to plan for the future effectively."

Capitalizing on a new opportunity
For those in the CPG industry, moving to digital channels can present a new opportunity to reach new prospects. Conversely, for online retailers looking to expand into new retail categories, the CPG sector may present an ideal opportunity to provide customers with new ways to shop for old products.

Retail has increasingly been going in a digital direction, so it only makes sense the CPG sector would shift the same way.