Home » Consumer Confidence and the Growth of eCommerce
While 2019 got off to a rocky start, with a partial government shutdown and trade challenges attributed to tariffs, consumers at the close of 2018 were buoyed by their strong household financial health and were spending accordingly. The latest IRI Consumer Connect survey results find that nearly 55% of consumers report their households were in good financial shape in Q4 2018, up 4% from Q3 2018 and 2% from Q4 2017. Hand-in-hand with consumer confidence is the growing and evolving eCommerce channel. In fact, 2018’s eCommerce sales increased by a whopping 35.4%, according to IRI’s new research, Consumer Confidence Reflected in eCommerce Growth.
Consumers are increasingly comfortable with online purchasing, and retailers of all stripes are upping their online offerings, working to enhance the shopper experience with simple navigation, assortment, good values and delivery options.
“Millennial and Gen X consumers are more at ease with online purchases than older generations, and as eCommerce becomes more of a routine, those shoppers are migrating offline efforts to save money to their online practices,” said Joan Driggs, vice president of Content and Thought Leadership for IRI. “Online offers a lot of additional outlets for smart shopping, including easy comparison shopping and keyword search for more informed purchases.”
“Pure-play retailers garner more than half of all online CPG purchases, but traditional brick-and-mortar retailers continue to invest and win share of the eCommerce pie,” said Sam Gagliardi, head of eCommerce for IRI. “It is incumbent upon the future success of these traditional retailers to invest in the shopper experience both in-store and online.”
Non-food items, particularly personal care and home care products, are tops in online purchases. IRI E-Market Insights reports that vitamins, pet food and supplies, and skin care products are the top- selling items. Pet food and supplies are often bulky items that are inconvenient to purchase off store shelves. Vitamins, typically purchased for specific health benefits, are likely considered easier to shop for online through keyword search and with access to additional information.
Specifically, Q4 Consumer Connect survey respondents say buying online allows them to find lower-priced beauty and personal care product options — 29% of total U.S. consumers, 45% of millennials, 35% of Gen Xers, 27% of boomers and 14% of seniors. These results closely mirror thought on home care products, with 30% of total consumers, 43% of millennials, 36% of Gen Xers, 27% of boomers and 19% of seniors saying they find lower-priced options online.
While fresh and frozen items rank among the bottom of eCommerce sales categories, there are signs of significant growth, indicating that retailers — likely with the support of such flexible options as click-and-collect — are starting to crack the code on delivering fresh and frozen items via online.
Millennials and Gen Xers, the two generations most likely to find value in shopping online, are also the generations that report having the most difficulty affording needed groceries (34% of millennials, 36% of Gen Xers). More than half — 54% — of millennials and Gen Xers report they are less likely to make impulse purchases when buying online. With this in mind, eCommerce should be touted as a tool for helping shoppers stick to their budget. Overall, 50% of total respondents report they are less likely to make impulse purchases online, including 49% of boomers and 44% of seniors.
It’s no surprise that 38% of all consumers like ordering online and picking up in the store, because it is convenient and is a good way to avoid shipping fees. In fact, 49% of millennials, 48% of Gen Xers, 38% of boomers and 24% of seniors feel the same.
In addition to purchases of bulky or heavy items, such as pet food, shoppers are increasingly going online for more sensitive purchases. IRI E-Market Insights reports that gastrointestinal and adult incontinence products are among the largest eCommerce growth categories. These products are not what people imagine themselves needing, so when these occasions arise, it’s both a comfort and a convenience for shoppers to learn about and order products online.
“eCommerce sales will continue to climb in 2019 and beyond, with retailers increasingly investing in better ways to engage shoppers, including with improved navigation and mobile access, delivery and payment options, and endless aisle assortments,” added Gagliardi.