Amazon’s $13.7 billion purchase of Whole Foods has been described as revolutionary, sending shockwaves across the grocery sector, but a look at how consumers are buying their groceries and other CPG items suggests Amazon is simply responding fast to where the money is.
While brick-and-mortar retail sales of grocery and other fast-moving consumer goods (FMCG) declined slightly by $1 billion to $771 billion in the year ended May 27, online sales of those items, including meal kits and grocery delivery, jumped 32% to $74 billion during the same period, according to a Nielsen study released Tuesday. 

Nearly nine out of 10 dollars of FMCG retail growth came from online in the past year, and ecommerce drives growth across various product categories, according to Nielsen. 

For instance, online grocery sales increased $2.4 billion in the year ended April 29, nearly four times the $619 million increase in the brick-and-mortar space. Web sales of pet care products surged by $3.4 billion, more than 10 times the $317 million growth observed on the physical store front. Personal care, health care and household products also saw an online increase many times that of store growth. In beauty, the shift was even more dramatic, where ecommerce was the only area that saw higher demand—a gain of $1.6 billion compared to a decline of $168 million in brick-and-mortar sales.

“Any FMCG strategy that’s not already factoring in e-commerce is missing a big part of the growth strategy,” Nielsen said in the report. Amazon’s Whole Foods buy is a clear sign “that e-commerce is fundamentally changing the retail landscape.”

Even though online only generates about 6% of UPC-coded FMCG sales, the shift, while far slower than that for electronics and apparel categories, is also tilting in ecommerce’s direction: for categories like beauty and pet products, nearly 30% of spending already is taking place online. For household products, health care, and personal care items, online contributes at least 10% of sales.

Sourced through Scoop.it from: retail.emarketer.com