Almost one year into the COVID-19 pandemic, the ecommerce landscape is continuing to transform in ways that even the most seasoned marketing executive couldn’t have predicted – and the consumer-packaged goods (CPG) and online grocery industries are no exception.
CPG and online grocery appeal to consumers because they provide pandemic-safe options for purchasing essential items. Consumer packaged goods are any items that consumers use almost daily and replace frequently, including food & beverage, personal care items, and household products. With the pandemic causing health and safety concerns, CPG and online grocery have surged as the most safe and efficient way to get these essential items.
In this article, we’ll dive into the latest stats and trends around CPG and online grocery, how the coronavirus pandemic has impacted this industry, and tips and strategies for CPG and online grocery brands in 2021.
CPG Trends + Stats for 2021
After increasing 5.2% to $19.4 billion in 2020, US digital ad spend for CPG is expected to increase 16.4% to $22.58 billion in 2021. This means that CPG now is the third largest category of overall digital ad spend, only falling behind retail and financial services. More consumers than ever have been shopping for CPG items online, with 31% of shoppers making digital CPG purchases in the last year.
US mobile digital ad spend for CPG is projected to have increased 11.4% to $14.2 billion in 2020, with mobile now accounting for 73.2% of all CPG digital ad spend. The most popular formats for CPG are mobile ads for social networks and video platforms.
Digital video ad spending is expected to have made up almost half (47.5%) of CPG display advertising spend and was the fastest growing ad format for CPG in 2020 in terms of spend, projected to have grown 17.1% to $5.54 billion. CPG display advertising now makes up 28.6% of overall CPG digital ad spend.
Online Grocery Trends + Stats for 2021
Online grocery sales are projected to have jumped 53% in 2020 to reach $89.22 billion. That’s a $30.86 billion YoY increase.
After such a dramatic increase last year, online grocery sales are projected to see more modest growth in 2021, increasing 5.2% to reach $93.83 billion. Growth is expected to increase even more in 2022 (18.1%) and 2023 (17.0%), though, projected to hit $129.72 billion by 2023.
These numbers equate to a total of 131 million digital grocery buyers in the US in 2020, a 41.9% increase from 2019. This will grow steadily over the next several years to reach 147.4 million online grocery buyers in 2023. What’s more, a significant 68% of new digital grocery shoppers say they will continue to shop online for groceries in the future.
A major driver of online grocery growth is buy online, pick up in-store (also known as BOPIS, BOPUS, or click-and-collect). After seeing a modest $1.2 billion in sales in August 2019, US grocery delivery and pickup sales surged to $4 billion in March 2020 and hit a record $7.2 billion by June 2020.
COVID-19’s Impact on CPG + Online Grocery
With COVID-19 restrictions in place and consumers’ safety concerns mounting, CPG sales saw an $8.5 billion increase over the two-week period of March 7-March 21, 2020, right when the pandemic was beginning to take shape in the US. According to Neilsen, that’s 15x the category’s average rate of change. During this time, 35% more people were shopping online for CPG items, with grocery a leading driver of sales. Online CPG sales increased 91% during that first week.
Essential items and personal care products are both categories that have seen heightened consumer interest over the course of the pandemic, and they’re both great use cases for CPG and online grocery. The pandemic has forced consumers to shift their priority toward products that are available in bulk, last longer, and provide a high value at a more affordable price. With this shift, online grocery and CPG have become very appealing options for consumers.
In the age of COVID-19, buy online, pick up in-store (also known as BOPIS, BOPUS, or click and collect) options for grocery have surged as a safety precaution, with many consumers continuing to practice social distancing and avoid busy shopping centers. In fact, after growing a modest 35% year-over-year in January 2020, BOPIS grew 259% year-over-year by August 2020. Similarly, 6.9% of the Digital Commerce 360 Top 500 offered curbside pickup at the end of 2019, compared to 43.7% by August 2020.
CPG + Online Grocery Strategies + Tips for Brands
The appeal of CPG and online grocery is especially high for consumers who have become wary about spending their disposable income. For many consumers, price continues to be a major factor in deciding whether to purchase a product. CPG brands should keep this in mind at least throughout 2021 as the pandemic continues to cause economic uncertainty.
Another trend that accelerated in 2020 for myriad reasons is the importance that consumers place on a brand’s reputation, trustworthiness, and ethics. With growing concerns like social unrest, the coronavirus pandemic, and consumers’ general distrust in brands, brand authenticity has become absolutely crucial for brands that want to grow in 2021 and beyond. The reality is that consumers’ perception of your brand will have a major impact on your bottom line in 2021.
Brand authenticity – which means being as genuine, transparent, and ethical as possible – will lead to more consumer trust, which in turn generates long-term brand loyalty. Maintaining trust with consumers should be a key component of your marketing strategy as we advance into another unprecedented year.
CPG and online grocery are facing a new reality and are continuing to transform as the coronavirus still poses a serious threat in many parts of the world. In light of the pandemic, CPG and online grocery are appealing options to buy essential items for consumers with safety concerns.
Are you a CPG or online grocery brand with big goals for 2021? Our team would love to work with you to help achieve them, whether you’re looking to increase your Amazon sales, improve your paid search presence, or optimize your website and landing pages. Reach out anytime through our consultation page to connect one-on-one with an industry expert who can help identify untapped growth potential for your business.