Have you ever plucked a bottle of ketchup from a grocery store shelf after remembering your kids finished the last bottle the night before?
Or perhaps you’ve indulged in a box of cookies that wasn’t on the grocery list but still somehow ended up in your cart?
These spontaneous purchases are a challenge for some of the largest packaged food companies as they try to appeal to shoppers staring at their screens instead of wandering the aisles.
Already faced with declining center-of-the-store grocery sales in recent years, food companies like Deerfield-based Mondelez International and Kraft Heinz, co-headquartered in Chicago and Pittsburgh, are pouring resources into figuring out how to succeed online as a growing number of people shop there instead.
In recent earnings calls, executives acknowledged the accelerated pace of change now underway.
“What is new is the frequency and the speed at which the market is changing,” said George Zoghbi, strategic adviser for Kraft Heinz, on the company’s earnings call last week.
The vast majority of retailers now offer in-store pickup or delivery, said Zoghbi, who was formerly the company’s chief operating officer for its U.S. business. And, he noted, people shop differently when buying groceries online versus walking down the aisles.
In response to this shift, Kraft Heinz is investing “to build our capability for the pull factor” in online sales, he said. Kraft Heinz recently promoted Nina Barton, former marketing chief, to be the company’s first president of global online and digital growth initiatives.
“Our job is the same as it’s ever been — to adapt quickly and keep our brands relevant for all customers and channels,” spokesman Michael Mullen said in an email.
Total global retail e-commerce is expected to grow by 20 percent to become a $4 trillion market by 2020, far outpacing the growth rate of traditional retail, according to Nielsen research. But so far, online sales of groceries has lagged behind other consumer goods like clothes and electronics.
That’s in part because grocery retailers have yet to crack the code on delivery of fresh food, which can be costly and labor intensive. Some retailers have found more success so far with in-store pickup options.
“People are just not sure how to make money on grocery delivery,” said Randy Hofbauer, digital and technology editor for Progressive Grocer, an industry trade publication.
Perhaps it should come as no surprise then that food manufacturers are still trying to navigate their own digital strategies. The Grocery Manufacturers Association, an industry trade group, published a report this year — after interviewing 22 executives — that concluded the industry is still playing catch-up.
“Not that long ago, large consumer packaged goods companies in developed markets had little to worry about. Their products dominated retail shelves. … In the ‘new normal,’ however, everything has changed. Consumers want more,” said Laura Gurski, senior managing director of customer and channels for Accenture, in an email. Accenture partnered with the grocery trade group on the research.
While 23 percent of Americans are buying groceries online today, that’s expected to more than triple in less than 10 years, according to a Nielsen report published last week.
Mondelez, parent company of brands like Oreo cookies and Ritz crackers, has invested heavily in e-commerce, partnering with bricks-and-mortar retailers as well as online giants such as Amazon and Alibaba. Mondelez plans to grow its e-commerce business to more than $1 billion by 2020.
