Zenith’s latest consumer insight report on the fast-moving consumer goods market reveals Australians still favour in-store grocery shopping, despite increased investments on e-commerce.
While 29 per cent of Australians started purchasing more of their groceries online because of the pandemic, 21 per cent say they will continue to do so when the pandemic is over, according to a national ZenPoll of 1,023 Australians carried out in March.
The ZenPoll found there is still a strong preference for in-store grocery shopping among 74 per cent of Australians, versus 24 per cent who prefer to do their groceries online.
However, as supermarket retailers are forced to be more digitally advanced to adapt to the ups and downs of COVID-19 restrictions, many are investing heavily in their ecommerce and click and collect services, Zenith said.
On digital adspend, Vikki Pearce, head of digital at Zenith Melbourne, said: “The online nature of these services is increasing supermarket retailers’ focus on digital media investment in what has otherwise been a softening market.
“And FMCG brands are following suit—particularly over-indexing in their online video spend as they strive to keep top of mind and capture share of wallet not only in the growing eCommerce opportunity.”
The insights come alongside the release of Zenith’s ‘Business Intelligence – FMCG Food and Drink’ report.
According to the report, internationally, FMCG brands will increase their ad expenditure on digital channels by 7 per cent a year to 2023—above the 4 per cent annual growth forecasts for FMCG adspend as a whole in the 12 markets included in the report.
With the reach of TV advertising declining (especially among younger generations), Zenith forecasts that FMCG digital adspend will increase from US$12.3 billion ($15.87 billion) in 2020 to US$14.9 billion ($19.23 billion) in 2023.
The market share will rise from 46 per cent to 49 per cent, too.
This comes after ad expenditure by FMCG brands fell more sharply than the ad market as a whole in 2020, shrinking by 10.7 per cent to US$26.7 billion ($34.46 billion).
Zenith explained that this was not because of any shortfall in demand, as demand soared as people stopped eating in restaurants, cafes and bars and shifted consumption to the home.
Instead, FMCG companies were faced with the challenge of ramping up production while supply chains were disrupted, Zenith said, and using limited available distribution to get their products onto shelves in stores, or to consumers’ homes.
Many FMCG companies therefore cut back on promotional activity for products they couldn’t get to consumers quickly enough to satisfy demand, and invested in distribution infrastructure instead, especially ecommerce operations and partnerships.
Zenith forecasts that the recovery of FMCG adspend will roughly track the market as a whole in 2021–23.
Zenith claims a bounce-back is “almost inevitable” in 2021 given the comparison with the sharp drop-off in 2020, particularly during Q2, though it will still be 6 per cent below 2019 levels.
FMCG companies face uncertainty over how quickly consumers will return to shops, and how much their behaviours have been permanently affected by the pandemic.
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