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IGD predicts logistics companies will move into retail

06 June 2019

IGD made the prediction as a result of its new report into digital technologies and the food and consumer goods industry, which it carried out in association with The Consumer Goods Forum.

The report reads: ‘Some logistics companies will evolve to become retailers. They will make the most of their supply chain and operational expertise, which are critical success factors in eCommerce profitability, they will launch their own websites.”

It adds: ‘Increasingly, experts in the digitisation of the supply chain are transforming themselves into retailers. Within major cities, rapid-delivery courier companies pick from physical stores or their own dark stores. In emerging markets, these logistics providers are opening their own marketplaces.’

IGD also pinpointed the evolution of digital retail ecosystems.

This can be defined as vast, interconnected communities of consumers, retailers and partners. Consultant Bain & Co says they are becoming the norm in Asia, and will become an important part of the retail landscape in other markets in the years ahead.

IGD associates these ecosystems with ‘efficient, automated and digitised logistics’. 

It reads: ‘With rising consumer expectations for product assortment, availability and delivery speed, logistics are increasingly a key differentiator for retailers. Ecosystems, with a strong logistics backbone, allow retailers to trade where they have no physical stores, offering faster fulfilment, delivery to remote hard-to-reach locations, plus easier cross-border trade’.

The report says ecosystem evolution will vary considerably by market. The level of market fragmentation, maturity of store networks, service providers, logistics businesses, demographics, consumer preferences, plus data and competition regulation will all influence the types of ecosystems that emerge. There will only be a few international super- ecosystems but other scaled-down versions will form within markets

It also predicts more technology companies will evolve into ecosystems, mirroring the model developed in Asia with Alibaba, for example.

Overall, IGD predicts online global growth of 163% by 2023, adding $257bn to the food and consumer goods industry.

Susan Barratt, CEO at IGD, said: “We are living in exceptional times, with an extraordinary burst of retail innovation, driven largely by digital developments. With this research we explore the global proliferation of retail innovation from three different directions: established players, online specialists and the new ecosystems. We believe that plenty of the new emerging models are set to grow and prosper, which means established retailers will need to work hard and swiftly, either to limit their impact or to emulate them.

“The digitisation of the food and CPG industry has already disrupted and transformed the industry, yet the story has only just begun. To help businesses understand the opportunities and challenges that businesses face, we have identified three retail models that have developed as the food and CPG industry digitises and we project how these business models will evolve.”

For more details about the three digital retail models of the future, download IGD’s free report: igd.com/digitalretailmodels