Despite Growth, Online Grocery Still Has Long Way to Go to Become Meaningful Player
Shelton, CT – October 17, 2018 – Food and beverage categories have seen a meaningful increase over the last two years, as many major retailers saw same store sales rise thanks to an increase in median income and a low unemployment rate, according to the TABS Analytics 6th Annual Food and Beverage Consumables Study. The study identified solid share gains for online grocery but found that the format is still a small player in the $800 billion industry, accounting for less than 5 percent of sales.
“Growth in virtually every category of food and beverages examined in this year’s study can be attributed to two underlying trends: more buyers purchasing those products and heavy buyers increasing the amount of those products that they purchase,” said Dr. Kurt Jetta, president and founder of TABS Analytics. “Online retailers still have a lot of ground to make up to see the same kind of penetration we’ve seen in other markets, such as vitamins and products for children.”
TABS’ Sixth Annual Food and Beverage Study was conducted in August 2018 by TNS and was designed to uncover how consumer buying patterns within these categories are shaped by the promotions offered. There were 15 consumables categories analyzed: candy, carbonated beverages, cereal, cookies, crackers, frozen pizza, ice cream, juice (refrigerated), juice (shelf), frozen novelties, popcorn, salty snacks, sports drinks, water and yogurt.
Other key findings from the study include:
- More Buyers, More Frequent Purchases Drive Category Gains – The study examines a two-year compound annual growth rate (CAGR), which saw salty snacks overtake the No. 1 position, followed by frozen pizza, novelties and popcorn, which all showed strong gains. The only category that declined in the past two years is carbonated beverages, which still has a purchase frequency that outpaces water.
- Top Demographics: Millennials, Households with Kids Above Average Buyers – When looking at the heaviest buyers, both millennials (ages 18-34) and households (HH) with kids exceed the average by 2 to 3 percentage points. With median income rising, gains were seen in the middle-income levels, not just the highest income bracket.
- Top Deal Tactics: Low Prices and Circulars – Everyday low price (EDLP) remains the favored deal tactic, growing in popularity among those ages 18-34, while circulars rose to No. 2. Deal search declined significantly year over year, as households with kids seemed to prefer convenience to bouncing from store to store to get the best prices.
- Traditional Grocery and Walmart Still Most Favored Outlets – That quest for convenience seems to have led consumers to traditional grocery stores and Walmart. Despite their commanding lead, traditional grocery and Walmart saw a 2-percentage point year-over-year decline each, as small format stores – such as dollar stores, drug outlets and value food banners, like Aldi – experienced gains of 2 to 4 percentage points at their expense.
- Online Grocery Growing, But Nowhere Close to Success Threshold – Despite a 4-point year-over-year increase, the number of regular online food and beverage purchasers (defined in the study as six or more purchases per year) is still only 17 percent. Only 38 percent of consumers shop in the format even once, and well under half of the shoppers (44 percent) are loyal to the format. ”The stated loyalty rates (the percentage of online grocery shoppers that purchase there regularly) of online grocery shopping are well below the 75 percent level needed to ensure a viable, successful business model,” stated Dr. Jetta. “This format has a long way to go to achieve a stable demand; until then eComm grocery will be relying on having to invest in expensive trial-generating activities.”
- Demand for Trendy Organic and Diet Items Wane – While there may be much hype about the importance of having organic and diet products in the mix, consumer preferences indicate that these are not likely to become anything greater than niche markets. Only 13 percent of consumers said they try to purchase organic (-1 point compared to 2017), while low-cal/no-cal products showed a significant 4 percentage point year-over-year decline, indicating that it's not as big a priority for consumers as in the past.
- Top Four Brick and Mortar Outlets Dominate Candy Sales – In this year’s study, TABS Analytics did a deeper dive into the candy market. While chocolate was more popular for holiday-related candy purchases, it was almost a tie between chocolate and non-chocolate in everyday purchasing. Walmart, Target, dollar stores and traditional grocery accounted for two-thirds of all candy purchases.
More information about TABS Analytics industry and category studies is available at www.tabsanalytics.com/resources.
About TABS Analytics
Operating since 1998, TABS Analytics, based in Shelton, Conn., is a technology-enabled analytics firm. Its mission is to simplify and improve the way analytics are conducted in the consumer products industry. TABS offers cloud-based software analytics and applications solutions, including TABS Insight®, Pivotstream® and TABS Total Insights™, for CPG manufacturers that integrate, harmonize, and analyze sales and marketing data. Additional services include TABS CatMan Advantage™, an outsourced category management solution, TABS WorldView™, a global business intelligence tool, and TABS Promo Insight™, a cloud-based software and consulting service that helps companies measure, plan and optimize trade spending. For more information about TABS, please visit www.tabsanalytics.com/press-room to contact us directly.