The rise of e-commerce has placed significant doubt on the ability of traditional retailers to navigate successfully.
Many on Wall Street wonder what role bricks-and-mortar grocery retailers such as Kroger Co. (KR) - Get Report and Sprouts Farmers Market Inc. (SFM) - Get Report will play in the evolution of the industry as consumers are now not only shifting to shopping for apparel online rather than in stores, but groceries too.
What could be of worry for soda and snacks giant PepsiCo (PEP) - Get Report is that its products are typically "impulse" purchases, meaning most grocery shoppers do not go into a store for a bag of Doritos or a bottle of soda, instead they pick them up along the way on a whim.
Sanford & Bernstein analyst Ali Dibadj said this will be a "large problem" for PepsiCo as e-commerce expands within the grocery space.
"The broader problem is that a lot of snacks and drinks that we buy are not because we need them," Dibadj told TheStreet in an interview. "Going down the aisle, you pick up the product because you want it at that time. With convenience-type products, even if it shows up online, I want [that] cold drink now."
On a company earnings call Tuesday, Dibadj asked PepsiCo CEO Indra Nooyi if executives have thought about how to "sell impulse online well."
"How do you get that cold, icy package or quick 89 cents or 99 cents bag of Lay's [potato chips] to really resonate online without the immediacy of that channel?" Dibadj asked.
Nooyi admitted on the call that industry conditions are seeing "profound" change and that the company is working to "make sure that our snacks are more shippable."
Dibadj said the challenge is currently "unanswerable."
In an interview with TheStreet following PepsiCo's second-quarter earnings release, company Chief Financial Officer Hugh Johnston said he's not worried as "change for PepsiCo is just a constant."
"I think what you'll see us do over time is shape our supply chain more explicitly for online and innovate specifically for online," Johnston said. "There are certain characteristics that work better through online because of distribution so bulk density of the product, the online shopper tends to be a little healthier, a little more premium oriented."
Still, Amazon.com Inc.'s (AMZN) - Get Report recent $13.7 billion acquisition of organic grocer Whole Foods Market Inc. (WFM) casts even more of a dark cloud over the packaged food industry, as 52% of Americans who buy groceries online already do so through AmazonFresh, according to NPD Group research. Whole Foods' fleet of 4,177 stores could easily give Amazon the distribution it needs to expand its online grocery service and steal even more market share.
That may leave many bags of potato chips sitting on store shelves.
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