Non-Foods Going Up and Online
By George Anderson
Non-foods are going online. That’s the forecast of Forrester Research, which projects that an increasingly large percentage of sales in health and beauty care and other non-foods categories will migrate to e-tail between now and 2011.
Forrester’s US eCommerce: Five-Year Forecast and Data Overview, published last October, points to over-the-counter (OTC) medicines and personal care products, cosmetics/fragrances, pet supplies, flowers and greeting cards that will increase current level sales by two-times or more by 2011.
OTC medicines and personal care items, as defined by Forrester, generated $1.3 billion in online sales in 2006. By the end of 2011, that number is expected to climb to $3.3 billion or 10 percent of total category sales.
Based on Forrester’s numbers, it appears as though operators of food, drug and mass stores will need to develop a robust multi-channel approach to non-food sales if they are to avoid being picked off in a number of key categories.
By the end of 2011, for example, 14 percent of the dollars consumers spend on cosmetics and fragrances will be done online. Flowers and greeting cards (19 percent), toys and video games (30 percent), baby products (30 percent), office supplies (16 percent), and pet supplies (five percent) are other categories that consumers will increasingly go online to research and buy.
Consumers making these purchases fit a profile familiar to most retailers. They tend to be more affluent, educated and technically proficient. They tend to be more convenience than price driven.
Interestingly, these consumers see themselves as “being loyal to certain retailers,” opening up opportunities for merchants, according to Sucharita Mulpuru, senior analyst for retail at Forrester.
“As retailers leverage loyalty programs and credit card data to understand which consumers are most loyal to them, the online channel – as well as all other channels – will benefit from pushing appropriate marketing messages to companies’ best consumers,” Ms. Mulpuru wrote in the report.
Discussion Questions: If correct, what will the Forrester Research projections mean for purely brick and mortar retailers competing in non-foods in the year 2011? What actions does it suggest need to be taken now?