In a fast-paced world filled with personal electronic devices, garnering the attention of today's shoppers will require even more nimble strategies than ever before. Dairy will have to evolve and deal with these changing realities if it hopes to hold, much less grow, its market share.
"Retail has changed a great deal. The average U.S. retail store sold 3,000 items in 1940. Today, the number has exploded to 142,000 items to purchase in the average store," Todd Shilk with Tetra Pak told attendees at this year's Dairy Forum.
Couple that with the fact that Americans just don't spend much time eating, and food must be convenient. "Consumers spend 12 minutes eating breakfast, 26 minutes on lunch and 24 minutes on dinner," Shilk said, reminding the international attendees at the Boca Raton, Fla., meeting that Americans often don't consider eating at a social event like it is in Europe. "Alternatively, Americans spend 40 minutes each day on Facebook, 156 minutes on email and 162 minutes with mobile devices," Shilk noted, citing U.S. Labor Department statistics.
It's that evolving environment in which dairy will have to compete. Given the foothold that electronics has garnered, it will be a much different sales world.
"By 2020, 55 percent of transactions will involve digital commerce. An additional 15 percent will be pick and deliver," predicted Daniel O'Conner with RetailNet Group. The "pick and deliver" process will involve a shopper ordering products online, then a retail associate will pick them off the store's shelves and either deliver them to a loading bay or take them directly to a home. "It will not be a high-margin business, but retailers will have to incorporate the strategy if they hope to maintain or grow market share."
As far as profits go, "Amazon has changed product price points by immediately matching major retailers," said O'Connor. "When Amazon matches prices, Wal-Mart follows suit, which eventually affects the entire retail sector."
Another megatrend that is coming involves wearable devices, think wrist watches that function like cell phones.
"On these wearable devices people search Apps, not websites. As a result, the digital universe will transform into the greatest loyalty program every created," said O'Conner, as he explained once a person uses an App they are very likely to stay within a company's electronic store and become a very loyal shopper.
Of course, this means that retail will become even more competitive.
"We will go from 350 retailers of significant scale to 250 shortly," predicted O'Conner when evaluating the U.S. retail sector. "Just like the automotive industry was in the past, the U.S. retail sector is over capacity."
How dairy companies position products in this new sales environment will be a critical factor in future dairy sales both in the U.S. and around the globe.
(c) Hoard's Dairyman Intel 2015
February 2, 2015
