CPG industry

Do Millennials Have Time To Shop for Groceries?

HemaliThe time pressed millennials are actively shopping online, even for toothpaste because convenience and free time is more valuable than ever before. Online shopping just makes more sense to them – at a fingertip you can click, compare price, browse and purchase.

More than a third of millennials already say that they rarely or never go to an enclosed mall, according to a study by the Urban Land Institute. Thanks to new disruptions such as Boxed and Jet, the online CPG industry is going through a period of explosive growth. Wall Street predicts nearly 50% of CPG products will be purchased via digital by 2018. Digitally driven innovations are restructuring how consumers shop for and buy CPG products. This phenomenon is only going to expedite as nearly 80 million millenials start families, buying homes and continue to fill them with things. Today millennials are shunning brick and mortar facilities, seeking convenience first, and receiving superior service via online retail. It’s only a matter of time before this attitude prevails and formally disrupts the entire shopping experience.

The CPG industry is being forced to rethink their digital shelf strategy, as major disrupters such as Boxed, Jet, Soap Box, Bridge Box, Blue Apron and Soap.com are aligning with millennial needs. The CPG category is fast approach a tipping point; the new avenues of distribution, faster speed, and consumer demand are exerting heavy pressure on the category to adapt.

In 2015, 10% of CPG transactions are occurring online, however this will rapidly change to 50% by 2018.  CPG brands not actively embracing this revolution face loss of share, shrinking sales and decreasing loyalty.  Traditional retailers face massive waves of new competitive models, as start-ups are actively selling CPG brands in a more seamless manner. Additionally, new disruptors are using value added services and build niche positions. For example, Boxed is bringing warehouse shopping without the annual fees directly to mobile devices.

So what key insights, innovations and data are these disruptors embracing? Let’s take a look at Boxed.  They are capitalizing on a key habit with millennials- that they most often wait until the last minute to purchase basic household necessities. Boxed has developed an algorithm factoring in how long it takes for a millennial to finish a case of toilet paper. Applying usage data, they actively serve up products that may be in their “finishing cycle.”

Amazon, a leader with programs such as Prime and Subscribe & Save, has already enabled shoppers to purchase low-priced items. Most recently, Amazon launched PrimePantry, currently seeing about 400,000 interested shoppers per month. On PrimePantry, consumers can purchase everyday essentials.  It allows shoppers to pull several products together into a shopping box up to 45 pounds for cost-efficient shipping prices. Amazon’s brilliant targeting, logistics and pioneering shipping speed are key reasons for the increased CPG velocity.

Promising startup Instacart is a new platform that takes advantage of the ‘instant, immediate, now’ mindset of millennials. This new company promises one hour grocery delivery service. Instacart partners with local grocery stores across 15 markets and plays the role of personal shopper for many young people.

Lastly, CPG companies across the board know they need to move rapidly and quickly adapt to the new model. However, change is hard. Companies embracing the revolution and revamping their distribution strategies to compensate are seeing market traction. Those that remain stagnant, believing that their products won’t sell online, are truly missing out on breakthrough sales.

Hemali Lakhani is an experienced media professional with proven success in integrated media planning across high profile brands in the healthcare/pharmaceutical, automotive, retail, and financial services categories.  With over ten years of experience in strategic media planning, her expertise lies with developing strategic integrated solutions across clients such as Gilead, Valvoline, GE, Visa & IKEA.  Hemali has her BA from Pace University, Lubin School of Management and is in her final semester completing her MBA from Fordham University, Gabelli School of Business concentrating in media and marketing.  In addition, Ms. Lakhani resides in Long Island City, NY with her husband and two beautiful little girls, Maya and Arianna.