Coca Cola Co. CEO James Quincey has a new job and his company has a new obstacle: online shopping.
Quincey took the throne May 1, but trouble has been bubbling up for the soda company for quite some time now. According to recent research, customers made 51% of their purchases online last year, up from 48% the year before. It’s safe to say that number will only increase thanks to mobile devices: 63% of Millennials shop on their mobile phones every day.
Customers don’t get out much these days
They spend time scrolling through apps, shopping online for everything from boots to barbeques. Lately the focus has been on the plight of retailers like Sears and Macy’s, but traditional apparel companies are not alone in their suffering. With the growing popularity of grocery delivery, vending machines, food courts and those chilled beverages by the cash register are seeing much less action.
Think about it: you rarely head to the store just to buy a bottle of soda, but you’ve probably grabbed a quick refreshment while strolling around the mall. When you’re sitting on your couch ordering a cute handbag on Amazon, you aren’t faced with the temptation of a chilled beverage standing between you and checkout.
That’s not to say impulse buying is dead.
It’s actually more intense and intelligent than ever. The online shopper is constantly bombarded with carousels of items hand-picked just for them. Enticed by suggestions like “Customers also bought” and “You might also like”, shoppers can end up spending hundreds more than they planned on items they didn’t even set out to buy. Instead of tossing a Sprite in their cart, people are throwing in flat screen televisions and designer sunglasses.
Darn you, healthy habits!
Another behavioral shift threatens Coke’s sales. People care more about what they put into their bodies, and often choose to avoid sugary drinks. This trend will likely only become more pervasive as companies work to make healthy foods more affordable and accessible. While this is great news for people’s physical well-being, it’s essentially a death sentence for soda, which will never be viewed as “healthy.”
Both domestic and overseas soda sales have declined as restaurants have started purchasing less due to lower demand. Food sales for these same restaurants has not suffered — first, pizza and potstickers are much easier to deliver, and second, most of those lazy Millennials are sipping citrus-infused sparkling waters and Yerba Mate when they tap “Order” on their screen. They don’t need soda with all the glamorous alternatives available to quench their thirst.
If you can’t beat ‘em, join ‘em
The combined impact of digital and health trends has taken a toll on Coca-Cola. In the past year, the company’s stock fell by 4.9 percent. However, Quincey is not letting this discourage him: he is determined to help Coke survive the brick and mortar massacre by becoming a digital leader. Attempting to shed negative social stigma, Coke has invested in healthier drinks like Suja Life and Aloe Gloe, and is shutting down bottling plants around the globe.
Quincey is confident in his forward-thinking mission, and it would be wise for other soda companies to take a page from his book. Consumers are rapidly moving away from soda and the commercial ecosystem is doing nothing to hold them back.
Yeah, Coca-Cola is a classic. But even classics must be willing to adapt. Customers still want to “open happiness” like they have for decades. It’s just what makes them happy that’s changed.