SPRINGBOARD JOIN THE FIFTH GENERATION - Retail on the Cusp of a New Era - The Consumer Goods Forum
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SPRINGBOARD
Executive Summary 4 th MARCH 2021
JOIN THE FIFTH
GENERATION
Retail on the Cusp
of a New Era
SPRINGBOARD
RETAIL ON THE CUSP OF A NEW ERA | EXECUTIVE SUMMARY Agenda Introduction 3 Retail 5.0 and the New Battleground for Shoppers 4 4 Ways Consumer Brands Can Prepare for Future Trends 6 Sizing the Prize: The Delivery Intermediary Opportunity 9 Master Alibaba’s Digital Ecosystem to Succeed in China 12 About The Consumer Goods Forum 15 About Edge by Ascential 15
RETAIL ON THE CUSP OF A NEW ERA | EXECUTIVE SUMMARY
Introduction
Over the past 25 years, retail where necessary and understand how
has been on a difficult journey: from a to optimise their operating models and
physical-only activity to an omnichannel business and marketing strategies to
pursuit. The growth of ecommerce capture the marketplace shopper can win
around the world is well documented and big in this new era. Those that are slow to
the pandemic has accelerated digital retail do this will fall behind fast.
as shoppers have shifted their spending The Consumer Goods Forum and
from experiences and holidays to Edge by Ascential hosted a virtual
cooking equipment, TVs and trampolines. SpringBoard event on 4th March 2021 to
By 2025, online sales will account for discuss the future retail environment and
about 40% of total sales in the consumer the biggest challenges and opportunities
goods industry and ecommerce will be for CPGs in the new era of commerce. This
dominated by a handful of major platforms Executive Summary offers an overview of
and marketplaces, such as Alibaba and the key themes of the event, with a focus
Amazon. on why CPGs must embrace the might of
This is the next phase of the retail the marketplaces and change priorities
revolution - an era categorised by over the next few years to achieve results
marketplaces mastering personalisation in Retail 5.0.
at scale and big data being effectively
leveraged. Consumer packaged goods’
(CPGs) brands that are agile, can pivot SPRINGBOARD
3
RETAIL ON THE CUSP OF A NEW ERA | EXECUTIVE SUMMARY
Retail 5.0 and the New
Battleground for Shoppers
“By 2025, five marketplace giants will generate Since the beginning of the century
two-thirds of global ecommerce sales” and the early days of the internet,
-Edge by Ascential research retail has had to evolve in line with the
emerging drivers of industry growth. As
digital marketplaces gained traction with
shoppers, consumer packaged goods
Global Growth in ad spend on Amazon (non-DSP), Year-on-year % change companies (CPGs) had to figure out how
to manage transparency in a digital world.
They had to work out how to allocate their
advertising budget effectively, product
Speaker: innovation and fulfillment strategies for
Deren Baker, CEO, a world of clicks as well as bricks. Then
Edge by Ascential came the fantastic rise of algorithm-driven
commerce and the development of the
technologies that we are seeing scaled
today. The big challenge for CPGs over
the past decade or so has been speed to
market. Now, we are heading into a new
era of retail, what we at Edge by Ascential
call Retail 5.0.
Source: WARC *Excludes demand side platforms
Brands must focus on digital retail, where transactions actually happen.
Expensively trying to buy a crowd is not a strategy that can succeed in the
Retail 5.0 future.
4
RETAIL ON THE CUSP OF A NEW ERA | EXECUTIVE SUMMARY
Mastering Personalisation advertising to increase shopper loyalty levers that power each marketplace and marketplace marketing because that’s
at Scale and grow new customer markets and consistently managing these variables where your customers are already buying
segments. In addition, the death of at scale, across multiple retailers and your products. Retail 5.0 is a big shift in
This new generation of retail is the cookie means data management regions. how most brands and manufacturers
characterised by marketplaces mastering platforms (DMPs) won’t offer brands an currently operate and could require a new
personalisation at scale and leveraging alternative personalisation option. The fundamentals of shopping organizational structure as well as new
big data to win. For the most well-known and driving sales have not changed: business and marketing priorities, but
marketplaces today, commerce is just Effective Marketplace ensure your products are available, easy doing business like it’s 2010 is simply not
one spoke of an integrated ecosystem Strategies Will Be Key to to find and are compelling enough to an option in the 2020s and beyond.
with shopper data at the core. Amazon Future Growth drive conversion. In the world of scaled
has a loyalty programme, entertainment ecommerce, we believe this translates to
services through Prime, cloud computing Our Retail Insights analysts predict managing inventory in line with the rules
through Amazon Web Services among that by 2025, five marketplace giants will of the marketplace, mastering the search
other service lines that make the shopper generate two-thirds of global ecommerce algorithms to rank high in the results
experience “sticky”. In 2020, Amazon sales. This underscores the urgency of and using content, rating and reviews
spent almost USD $43 billion on research CPGs to master a defined set of priority to improve the shopper experience and
and development. e-tailers, tiering them and then targeting boost conversion.
them methodically. Brands must focus
We have seen estimates that by resources on learning the dynamics and Shift Your Ad Spend
2025, marketplaces could spend as mechanics of these global marketplaces
much as USD $60 billion on R&D. CPGs based on category and geographical Finally, we recommend CPGs move
will simply be unable to compete with the coverage to drive sales share and their advertising and marketing spend
capital availability that these marketplaces optimise revenue in mature markets. This away from more generic search and social
have at their disposal for innovation and means really understanding the individual marketing and allocate it to on-platform
5
RETAIL ON THE CUSP OF A NEW ERA | EXECUTIVE SUMMARY
4 Ways Consumer Brands Can
Prepare for Future Trends
“Winning on a digital ecosystem is like learning a new Every year, our Retail Insight analysts
video game… first, learn the rules, then play until you review what we see as the biggest drivers
figure out how to win” of change that could disrupt business in
- Xian Wang, VP, Retail Insight, Edge by Ascential the retail industry under five core themes:
society, technology, economy, industry
and policy. We call these the STEIP drivers.
We use the STEIP framework as a lens to
form a view on how the future will unfold,
with an emphasis on shopper mindsets
and behaviours and market trends.
Speaker:
Xian Wang, VP, Retail With this set of assumptions about
Insights, Edge by Ascential the future world, we recommend market,
customer and talent strategies that
will help forward-thinking businesses
succeed. Despite the uncertainty of the
future outlook, CPGs must still make plans.
Based on our 2021 research, here are 4
key recommendations for CPGs in 2021.
*57%
Of global sales will be made online by 2025
*3 X
By 2025, ecommerce will grow that much faster than store-based channels
Data provided by Edge by Ascential
6
RETAIL ON THE CUSP OF A NEW ERA | EXECUTIVE SUMMARY
Engage With All Digital
1. Touchpoints
drive innovation. Strong execution through
social media will be key to facilitating
who is maturing and moving into their
prime spending years. Brands that can
discovery, inspiration, conversion and demonstrate localism, provenance and
In 2020, retailers embarked on a loyalty in 2021 and beyond. transparency will earn the confidence of
needs-based digital expansion to serve these coming-of-age green consumers
their stuck-at-home customers during the Innovate With New Models - and using popular social channels in
COVID-19 pandemic. Many have spent 2. and Digital Touch Points innovative ways to drive engagement and
the past 12 months trialling new initiatives Like Social Commerce sales should be seriously considered.
in ecommerce, fulfilment and technology
Differentiate Through
3.
to better meet consumer needs for Social media is an established
convenience and safety. This trend will influencer in shopper behaviour. The rise Speed and Convenience
continue with retailers tailoring platforms, of Tik Tok, Pinterest and Instagram has
pricing and engagement to win over been quite tremendous over the past few Speed will become a major differentiator
shoppers in an increasingly omnichannel years. But one of the things we saw last this year and beyond. Not only have shopper
society. Brands must leverage all digital year and we expect to see grow in 2021 expectations increased with respect to
channels and platform tools to connect is social becoming a sales channel in and fulfilment requirements, but priorities are
with shoppers, particularly as physical of itself. This has led to a rise in sponsored fast-changing too. To compete, brands must
shelf space continues to decline. Support advertising and purchasing through social develop the analytics capabilities to predict
your retail partners with online-to-offline platforms. Livestreaming is booming, first demand more accurately as well as develop
integration that will build brand loyalty popularised in Asia but now spreading more flexible product innovation cycles and
in-store but also, understand you can no across borders. It started with fashion supply chains that can keep pace with fast-
longer just rely on these retailers to build and apparel but now increasingly food is changing customer requirements. This is a
loyalty for you. being featured. Cooking demonstrations radical change to the go-to-market of five
are gaining traction. This is an emerging years ago.
Direct-to-consumer channels are but potentially significant opportunity to
worth considering, with a laser focus on connect with the purpose-driven and
constant testing and real shopper insight to socially responsible Gen-Z shopper,
7RETAIL ON THE CUSP OF A NEW ERA | EXECUTIVE SUMMARY
Case Study: Walmart.com. As more retailers cooperate Mars Wrigley brands, such as Mars, Galaxy
Dinner brought to you by Kroger with these intermediaries as a cost-effective and Bounty within an hour of having a
By partnering with personalised way to scale up fulfilment capacity quickly, craving. The service was piloted in Delhi,
meal planning app Dinner Daily, Kroger we see them becoming essential points of Bangalore, Kolkata and Chennai with the
is making life easier for its existing influence in a shopper’s purchase decision. understanding that it would be rolled out
customers and attracting the attention of Brands must start treating intermediaries across the country in due course.
new shoppers too. Dinner Daily creates as customers to win visibility on these
weekly meal plans according to member platforms. They will also have to also work
food preferences, health and dietary closely with their retailer partners from
requirements. Customers easily select whom the intermediaries pick and pack from
the items they need on the app which is to ensure on-shelf availability. If that sounds
integrated with Kroger’s online ordering like business becoming more complex, that
system, incorporating Kroger special is certainly the case. Brands should treat
offers so customers can take advantage the rapidly-growing intermediary segment
of discounts. as a rising channel to customer, developing
tailored product, pricing and promotional
Treat Intermediaries as
4.
strategies to drive conversion on these
Customers platforms.
On-demand delivery providers, Case Study:
like Uber Eats, Instacart and Shipt, were Mars Wrigley and the “Snickers
standout performers in 2020 and we Store”
anticipate they will be sticking around. In Confectioner Mars Wrigley launched
the US, grocery sales on these platforms a dedicated online store on India’s
boomed. Instacart led the way reporting delivery platform Swiggy in 2020.
USD $12.6 billion of sales in 2020, double Through the Snickers Store, chocolate
its nearest rival, the grocery platform of lovers in India can access the popular
8RETAIL ON THE CUSP OF A NEW ERA | EXECUTIVE SUMMARY
Sizing the Prize: The Delivery
Intermediary Opportunity
Panellists:
Doug Koontz, Director, Content Strategy and Analytics, Retail Insight, Edge A channel sitting between consumers and merchants
by Ascential
Robert Gregory, Research Director - Advisory, Edge by Ascential
Paul Harrison, Chief Operating Officer, Ascential
Jonathan Jagard, Senior Manager, eCommerce Insights, Edge by Ascential
“Our data predicts by 2025 delivery intermediary GMV will more
than triple to more than $980 billion, from $261 billion in 2020”
“The scarcity of publicly available data makes it difficult for CPGs
to quantify the size of the opportunity and so justify the size of the
investment - yet intermediaries cannot be ignored”
Last-mile delivery is an evolving, complex and growing sub-channel of
ecommerce. Ascential’s ecommerce experts take stock of a dynamic market.
9RETAIL ON THE CUSP OF A NEW ERA | EXECUTIVE SUMMARY
What Are Delivery significant mergers and acquisitions in the in 2019 to 14% in 2020 as supermarkets
Intermediaries? sector as leading players made some big sought distribution partnerships to boost
bets on the potential size of the last-mile capacity and keep up with demand. In
Delivery intermediaries are food delivery market. the UK, Aldi, Waitrose and Morrisons
aggregators or last-mile delivery forged partnerships with Deliveroo. In the
providers. They are platforms that sit One example was Dutch online food US, 7-Eleven teamed up with DoorDash,
between the consumer and the merchant. delivery service Takeaway agreeing to Postmates and Favor Delivery.
Typically, the way they work involves the pay USD $7.8 billion for the UK’s Just Eat
consumer placing an order through an and then as the ink was still drying on that There have also been interesting
intermediary’s app and then the platform deal the combined firm offered to buy US developments happening outside
leverages a network of local couriers to rival Grubhub in a deal worth USD $7.3 the grocery category. Skincare-to-
provide an on-demand delivery service. billion at the beginning of 2021. These are cosmetics firm Avon in December 2020
very big sums and send a clear message announced the launch of an on-demand
This sector began life working with - global market dominance is the name of same-day delivery service courtesy of a
restaurants to deliver food on-demand the game. partnership with Rappi, which will pilot in
but with the exponential growth in Brazil. Consumer electronics chain Best
demand for ecommerce in 2020 as a Rethinking Convenience: Buy partnered with Instacart as a cost-
result of the pandemic and lockdowns, Grocery and Beyond effective, more reliable and faster option
some intermediary platforms expanded of being able to offer its US customers the
their offering, developing partnerships As the biggest names in the sector convenience of same-day delivery than
with retailers and supermarkets. expanded their geographic reach last the traditional package carriers.
year, some of them also started looking to
Gross Merchandise Value (GMV) or new services, categories, and channels to
total revenue in the sector worldwide sustain growth in a post-pandemic future.
grew by about 64% in 2020, faster The grocery category was one area of
than ecommerce as a whole. 2020 expansion. Edge by Ascential data shows
also sounded the starting gun on some that GMV in the category grew from 10%
10RETAIL ON THE CUSP OF A NEW ERA | EXECUTIVE SUMMARY
Our data predicts that by 2025 mean for content, assortment and Intermediaries are an emerging
delivery intermediary GMV will more than pricing? How does the digital shelf and complex aspect of ecommerce but
triple to more than $980 billion, from $261 differ from mainstream commerce? they will quickly become a core part of
billion in 2020. The opportunity cannot the shopper ecosystem that help create
be ignored, but at the same time, the fast- • How are our competitors structuring “stickier” consumer experiences and
changing dynamics of the market - with and partnering with the sector? encourage brand and retailer loyalty.
almost constant innovation, entries and
exits - and the scarcity of publicly available These are challenging questions to
data makes it difficult for CPGs to quantify answer, especially with limited industry
the size of the opportunity and where - precedent and a lack of historical data
and so justify the size of the investment. about this rapidly evolving channel.
Certainly, the sector is in an experimental
Evolving but Important phase, with businesses trialling certain
Channel approaches that will not always be
successful.
There is also often a degree of
scepticism internally about the channel In February, we released our most
and its long-term prospects. These are in-depth dataset of the intermediary
some of the challenges we hear: sector - globally and by region - with deep
analysis and predictions of its trajectory
• Which would be right for over the next five years. It is available
us and our shoppers? to subscribers of Retail Insight, our retail
intelligence platform that gives our clients
• Which should we prioritise? the knowledge, tools and data to win in
a fast-moving world of omnichannel retail.
• What are the characteristics of
each channel and what does that
11RETAIL ON THE CUSP OF A NEW ERA | EXECUTIVE SUMMARY
Master Alibaba’s Digital
Ecosystem to Succeed in China
“What is perhaps less understood is Alibaba is the world’s largest retailer But what is perhaps less understood
Alibaba’s huge and growing power as a ahead of Amazon and Walmart. In 2020, is Alibaba’s huge and growing power as a
marketing and advertising company, with it reported revenue of USD $667 billion marketing and advertising company, with
a data capture and management system and most of that was generated in China a data capture and management system
at its core” through the ecommerce giant’s Tmall at its core. This capability through Uni-ID
and Taobao shopping apps. Alibaba has allows Alibaba to trace the footprint of
for years been investing in these digital the consumer on its multitude of different
ecommerce platforms to meet diverse channels online and offline and so offer
demands from different demographics the brands that use the marketplace a
and drive domestic consumption. In rich consumer data centre to guide sales
Speaker: parallel, Alibaba has been growing and tactics and long-term business strategy.
Amber Chen, CEO, Duo Zhun developing a sophisticated ecosystem.
The company has added consumer
881 million touchpoints in all areas, from entertainment
Alibaba monthly active users (September 2020) and cloud computing to payments and
social networks. Of China’s almost 1 billion
940 million internet users, about four fifths regularly
Number of internet users in China - netizens (June 2020) access an Alibaba channel. That is all
quite well known.
12RETAIL ON THE CUSP OF A NEW ERA | EXECUTIVE SUMMARY
Activating the Brand Uni Operation Personalised
Databank • Provide data dashboard on a Recommendations
store-by-store basis, showing store
Through Uni-ID, Alibaba can help traffic and conversion data and The home page of the app will be
brands influence effective business comparatives with competitors. customised to each individual shopper
decisions. These are: based on search and purchase history.
In addition, the company has four levers to Compared to Amazon, Taobao has a
Uni Strategy: help brands engage with their consumers. more dynamic interface and is structured
• Helps brands to understand the These are: to encourage its shoppers to spend more
market landscape of their category time window shopping. This suits Alibaba
and future trends, consumer Marketing Events shoppers, who tend to be mainly women -
personas, where they are on their about two thirds of all users.
purchase journey and even support Alibaba has different levels of
new product launches through the marketing events. Double 11 - or Singles’ Short Videos
Tmall Innovation Centre (TMIC). Day - and Double 12 are examples of
top S-level promotion events. Alibaba The explosion in popularity of Tik Tok
Uni Communication: said that not even 30 seconds into 2020 has seen Alibaba put greater emphasis
• Identification of consumer media Double 11, Tmall’s orders set a record of on short videos. Diversified video content
preferences and touchpoints, 583,000 transactions per second, 1,457 scattered through the Alibaba ecommerce
whether they prefer live broadcast, times that of the first Double 11 in 2009, platform is successfully turning customer
real-time bidding advertisements, and exceeding the highest transactions traffic into revenue. In fact, 80% of traffic
reviews or other content and of 544,000 in 2019. Valentine’s Day, is currently coming from video and
then compare campaign-to- Women’s Day and Chinese Valentine’s livestreaming.
campaign ROI for more cost- Day in August are also key shopping
effective media execution. festivals that brands can benefit from.
13RETAIL ON THE CUSP OF A NEW ERA | EXECUTIVE SUMMARY
Livestreaming Brands looking to grow their
presence and sales in China should
Livestreaming ecommerce is partner with Alibaba and ensure that
booming in Asia - a trendy, modern take they are included in emerging initiatives,
on the US shopping TV networks but such as 3D shopping experiences and
with more charismatic hosts offering social commerce to encourage product
entertainment as well as an opportunity for discovery and gain an early-mover
the consumer to get more real-time detail advantage.
on the benefits of the product in a more
vivid experience. Sometimes, hidden
coupons are also made available in the
broadcast. Li Jiaqi earned the nickname
“the lipstick king” after reportedly
selling 15,000 lipsticks in less than five
minutes. He has been acknowledged
by Time Magazine as being one of
the emerging Top 100 Most Influential
People in recognition of his commercial
achievements through live selling. Live
broadcast currently accounts for about
10% Tmall traffic. Brand executives, even
the CEO, can engage directly with their
market in this way.
14RETAIL ON THE CUSP OF A NEW ERA | EXECUTIVE SUMMARY
About
The Consumer
Goods Forum
The Consumer Goods Forum About Edge
(“CGF”) is a global, parity-based industry
network that is driven by its members
to encourage the global adoption of
by Ascential
practices and standards that serves the Edge by Ascential helps global and to provide brands with a comprehensive
consumer goods industry worldwide. local brands to win in digital commerce in solution to optimise online demand,
It brings together the CEOs and senior a new and complex era of omnichannel particularly through China’s biggest digital
management of some 400 retailers, retail. Our unique combination of industry- marketplaces Alibaba and JD.com.
manufacturers, service providers, and leading data, analytics, market research
other stakeholders across 70 countries, and expert consulting solutions inform For more information,
and it reflects the diversity of the industry the ecommerce strategies of the world’s visit www.ascentialedge.com
in geography, size, product category leading brands. We help our clients to
and format. Its member companies have optimise their performance and always Connect with us on:
combined sales of EUR 3.5 trillion and make the right investment decisions, LinkedIn @EdgeAscential
directly employ nearly 10 million people, drive margin growth and achieve the Or Tweet us on:
with a further 90 million related jobs necessary edge to grow. More than 400 Twitter: @EdgeAscential
estimated along the value chain. It is global brands depend upon our weekly,
governed by its Board of Directors, which daily and real-time data-driven insights.
comprises 58 manufacturer and retailer
CEOs. A subsidiary of Ascential plc, the global
specialist information company, Edge by
For more information, please visit: Ascential operates in North America, Europe
www.theconsumergoodsforum.com. and APAC, where we work with Yimian and
Duo Zhun (DZ), also Ascential companies,
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