Hyper and supermarkets losing grip on retailing, ecommerce and discounters gaining ground.

Hyper & super losing power

Kantar Worldpanel (KW) has released its annual report on fast-moving consumer goods (FMCG) trade channels (6 July). It shows the market share of trade held by supermarkets and hypermarkets across the globe is shrinking. In 2016 hypermarket and supermarket FMCG value sales grew by just 0.7 per cent, while spend online grew by 26 per cent, in discounters by 5.1 per cent and in cash and carry by 4.1 per cent.

KW predicts by 2021 hypermarkets and supermarkets will account for less than half of total trade, with ecommerce set to grow to 7.5 per cent and discounters 6.5 per cent. 

Global FMCG value share and 2016 value growth, per channel

Channel Global value share 2015 Global value share 2016 Percentage value increase (YOY)
Ecommerce 3.8%  4.6% 26.0%
Discounters  5.5% 5.6% 5.1%
Convenience  4.6% 4.6% 4.1%
Cash and carry  1.1% 1.4% 4.1%
Hypermarkets and supermarkets  53.2% 52.0% 0.7%
Traditional  26.1% 26.1% 3.2%
Door to door  0.8% 0.8% 0.7%
Drugstore and pharma  0.6% 0.6% 0.9%

On online shopping, the report says: 

“The share of grocery shopping conducted online continues to rise, particularly in the world’s most advanced ecommerce markets, such as South Korea, China and the UK. In the UK, online sales grew from 6.7 per cent to 7.3 per cent value share in the last year alone. British shoppers are second only to South Koreans in the proportion of groceries they buy online.” 

The discounters, led by Aldi and Lidl, are giving grief to the established super and hypermarkets, just as the supermarkets gave grief to traditional grocers post-World War II. Discounters were the second-fastest growing channel in 2016, with 5.1 per cent value growth.

 

Discounters – fastest growing markets Value share 2016 Growth 2015-16
Colombia 7.0% 124%
Argentina 8.6% 32%
Brazil 1.6% 13%
UK 9.2% 11%
Ecuador 12.5% 7%

 

Discounters – slowest growing markets Value share 2016 Growth 2016/2015
Japan 5.3% 3%
Spain 16.2% 1%
Chile 12.5% -2%
Portugal 14.4% -4%
France 11.0% -5%

Stéphane Roger, global shopper and retail director, Kantar Worldpanel:

“Channels which traditionally dominated the field – supermarkets, hypermarkets, drugstores – are in steady decline worldwide. Step forward the ‘new order’: ecommerce and discounters, cannibalising the big retailers with their promise of convenience and lower prices. 

“Technology is fast changing the way people shop and, with ecommerce and discounters set to continue their march at the expense of large format retailers, there is an urgent need for retail reconfiguration across the world.” 

As far as we can tell, all this makes little difference to small producers, but those bigger, often referred to as medium to largish producers, will find the ground moving below their feet. The discounters carry smaller ranges and more own-brand. Supermarkets are already seeing both the attraction to consumers and better financial control in dealing with fewer producers and fewer lines or SKUs.

There is plenty of global wine production and not as much loyalty to brands as there once was. Wine producers often seem slow to understand the fickle consumer, who will go where the price is right.

Group cheer

The New Zealand Delegat Group is in good cheer and sound fettle, preparing to face the future with good sales and increased income.

A media release issued on 17 July informed: 

“Delegat Group Limited (the Group) has achieved record case sales of 2,656,000 cases for the year ended 30 June 2017, up 10 per cent on last year. The Group has revised the unaudited forecast Operating Profit after Tax guidance from NZ$36 million to NZ$38.5 million [$33.46-$35.78 million]

for the year.

“The Group forecasts positive IFRS fair value adjustments for the year to be NZ$2.2 million which are expected to result in an IFRS Reported Profit after Tax of NZ$40.7 million. The forecast IFRS fair value adjustments are in relation to fair value movements on biological produce (grapes) and derivative instruments.

“The Group will announce the audited full year results in late August 2017.”

The cheer for the Australian industry is that global demand and higher prices obtained from other markets for New Zealand wine has meant less NZ wine on these shores. This must be a bonus for domestic producers.

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