Competition among FMCG channels in the digital era: discounts versus supermarkets

Online sales within the Fast Moving Consumer Goods (FMCG) industry are still very low, considering that e-commerce is estimated to represent only 0.9% of global grocery sales. It follows that within this sphere inter-channel competition is mainly focussed on sales tradeoffs among different “physical” store formats rather than on cannibalization between online and offline channels. In particular, the most interesting emerging scenario is an increasingly fierce face-to-face competition between Discounts and Supermarkets. Considering the above, the present work aims at deepening the effectiveness of three different retailing-mix levers, namely baseline prices, assortment depth and promotion pressure, on sales share switching from Supermarkets to Discount stores within the Italian market in 2012-2014 period. Findings, obtained by panel data analysis on IRI real sell-out dataset, suggest that Discount market shares in different FMCG product categories tend to increase to the detriment of Supermarkets when baseline price gap is wider and/or when assortment gap is thinner. Contrarily, an increase in Discount promotion pressure does not seem particularly effective in stimulating sales share switching from Supermarkets.