Some logistics firms ‘will evolve to become retailers’

Some logistics companies will evolve to become retailers as the first standardised wave of ecommerce fragments in a variety of creative new ways to sell and add value.

That’s according to a new report from IGD, in association with The Consumer Goods Forum.

Looking at how companies can respond to this change and how businesses will utilise digital technology to become more relevant, the report explores three digital retail models of the future and predictions for an increasingly digital food and consumer goods industry.

Major grocery ecommerce markets will continue to expand rapidly, growing at almost four times the rate of any other channel. Data highlights from the research include:  

• Asia-Pacific’s online grocery market will grow by 196% by 2023, adding $198bn
• North America’s online grocery market will grow by 152% by 2023, adding $38bn
• Europe’s online grocery market will grow by 66% by 2023, adding $21bn

Asia and North America will lead the way on the rate of growth, with Europe set to develop this channel at a comparatively slower pace.

Indeed, grocery ecommerce sales in Asia-Pacific are set to triple over the next five years, with IGD forecasting that in 2023, ecommerce’s share of grocery in Asia (7.5%) will be twice that of North America (3.4%), and close to three times larger than Europe’s (2.5%). 

IGD says businesses are transforming their established operations through digital technologies to enhance their stores, reduce costs and improve connection with customers. Its predictions for rapid evolution include:

1. Technology-led strategic partnerships will accelerate rapidly. Technology companies will have a much stronger influence on CPG retailing
2. Advanced digital technology will help physical stores close the data gap on pureplay operators
3. The commercial trading interface between established retailers and suppliers will be transformed by AI
4. The most advanced traditional retailers will diversify to become less reliant on selling products
5. Retailers with the best data capabilities will win in the long term by becoming incrementally better every single day

Ecommerce 2.0 – The first, mainly standardised wave of ecommerce is fragmenting in a variety of creative new ways to sell and add value.  IGD’s predictions for Ecommerce 2.0 include:

1. Successful pureplays will diversify offline, either by opening their own stores or forming alliances with traditional retailers 
2. Manufacturer D2C businesses will become a major force and they could be consolidated through a single ordering platform
3. Specialist retailers and marketplaces will proliferate
4. Some logistics companies will evolve to become retailers
5. Social commerce will go global, with platforms integrating with ecommerce to offer more frictionless shopping

Ecosystems A network of retail and consumer services is emerging, linked by logistics, financial services and technology.  IGD’s predictions for Ecosystems include:

1. Ecosystem evolution will vary considerably by market
2. More technology companies will evolve into ecosystems, with more major technology businesses broadening their capabilities and services
3. Ecosystems will recruit a growing number of established businesses to get even closer to shoppers and the wide range of products and services they need and want
4. New consumer services will be bolted onto ecosystems (e.g. healthcare, leisure, hotels etc.), connecting as many consumer touchpoints on the path to purchase as possible
5. The centralisation of data and use of advanced technology means that ecosystems will gain real time insights, promoting rapid change, driving greater personalisation for shoppers and raise profitability, a benchmark for all other retail models.

Peter Freedman, Managing Director of The Consumer Goods Forum, said: “While of course growth remains challenging for all of the established players in the industry, many are nevertheless finding that the ongoing disruption presents exciting opportunities. This report presents several ideas for consumer goods and retail companies looking to secure their long-term future, and we’ll be discussing some of these themes at the Global Summit in Vancouver: how scale and agility can impact your business model, how digital technologies will permeate decisions and how new forms of collaboration will help drive the sustainable evolution of our industry.”

Download IGD’s free report: igd.com/digitalretailmodels

Image by StockSnap from Pixabay